As business mail managers continue planning for the new year, they are probably encountering more uncertainty than ever before, thanks to the ongoing postal rates saga.
By the time this article is published, the U.S. Postal Service (USPS) will have implemented price changes to Priority Mail, Express Mail and other "Shipping Services."
The overall price change for all Shipping Services products is 3.6 percent, the average of the increase to Express Mail, Priority Mail, Parcel Select, Parcel Return Service, Global Express Guaranteed (GXG), Express Mail International (EMI) and Priority Mail International (PMI).
For many business mailers, Commercial Base and Commercial Plus pricing and thresholds are major concerns. Commercial Base prices are discounted prices available to shippers who use online and other authorized postage payment methods, and Commercial Plus pricing applies to large-volume shippers.
An average increase of 5 percent to Express Mail actually includes a 5 percent decrease to Commercial Plus prices, and the volume threshold for Commercial Plus Express Mail decreases from 6,000 to 5,000 pieces.
For Priority Mail, which is increasing by an average of 3.5 percent overall, there will be an average increase of 3.2 percent to Priority Mail Commercial Base prices, and an average increase of 2 percent to Priority Mail Commercial Plus prices. Additionally, the volume threshold for Priority Mail Commercial Plus customers is reducing from 100,000 to 75,000 total Priority Mail pieces in the previous calendar year.
For a full look at the changes planned for January 2, 2011, visit pe.usps.com. These changes reflect the rising costs of doing business for the USPS, as prices continue to increase for things like transportation, utilities and health care benefits.
For the Market Dominant or the "Mailing Service" category of products, the USPS can adjust prices in line with the Consumer Price Index (CPI) as allowed under the Postal Accountability and Enhancement Act of 2006 (PAEA).
The PAEA legislation also allows the USPS to request an exigent - or urgent - rate increase beyond the rate of inflation if it can prove that "exceptional and extraordinary circumstances" warrant such an increase.
That's where the current atmosphere of uncertainty comes into play.
In July, the USPS proposed an exigent request to raise rates beyond the CPI because of the recession and other factors that have caused mail volume to plummet. The Postal Regulatory Commission (PRC) denied the proposal in September, saying that the USPS failed to quantify the financial impact of the recession and how the rate increase relates to the loss of mail volume.
The USPS is appealing the ruling at the United States Court of Appeals for the District of Columbia Circuit, asking it to review the PRC's interpretation of exigency. The outcome of the court's ruling is not yet known.
Meanwhile, the USPS could continue its normal rate increases based on the rate of inflation, filing a new rate case sometime in 2011 for an increase within the CPI price cap. Or, it could file a recalculated exigent proposal later this year for review by the PRC.
Adding to the uncertainty is flexibility within even a CPI-based increase, which is averaged over all products within a particular class of mail. For example, lower margin products like small parcels could see a relatively higher increase compared to more efficient products like flats and letters, as long as the average increase is within the CPI price cap.
The bottom line is that there do not appear to be any quick answers available to mail managers. But even as the regulatory back-and-forth plays out, there are things you can do to position your business to succeed regardless of the outcome of this rate debate.
One key is having a link to this information and the ability to make sense of it. Some companies may devote resources to hire an in-house expert, while many count on an experienced third party service provider, with the knowledge and network to stay informed as the issues evolve. Whether in-house or contracted, your business needs a conduit to postal knowledge with real experience and a broad understanding of the industry.
If working with a third party works best for your business, look for a partner that can effectively manage your business relationship with the USPS on your behalf. Your partner should have personnel with experience within corporate mailrooms and experience working with, or for, the USPS.
Another key is automation technology, which can optimize efficiencies and control costs associated with your fundamental business mailing process. Automation can help streamline the upstream mail processes of sorting, weighing and applying postage to expedite the processing of flats, small parcels and bound printed matter before sending those pieces to the USPS for final delivery. It can also allow businesses to plug rate changes into their systems as they happen, ensuring proper postage and on-time delivery for your mail.
An investment in in-house automation technology may be cost-prohibitive for some companies, especially small- and medium-sized businesses with limited resources to devote beyond their core businesses. If that's the case for your company, working with a partner that already has advanced technology in place can be the most cost-effective way to automate your mailing processes.
This is an uncertain time for mailroom managers, but we're all hoping for the same outcome: an efficient USPS that will continue supporting the business mail industry with quality products and reasonable rates. Staying abreast of postal industry changes and incorporating automation technology into mailing processes can help mailrooms remain current and efficient, regardless of changes to the USPS rate structure.
Chet King, Postal Affairs Manager for UPS Mail Innovations, has more than 25 years of experience in the postal industry. Visit www.upsmailinnovations.com or call 1-800-500-2224 for more information about UPS Mail Innovations and its services.
By the time this article is published, the U.S. Postal Service (USPS) will have implemented price changes to Priority Mail, Express Mail and other "Shipping Services."
The overall price change for all Shipping Services products is 3.6 percent, the average of the increase to Express Mail, Priority Mail, Parcel Select, Parcel Return Service, Global Express Guaranteed (GXG), Express Mail International (EMI) and Priority Mail International (PMI).
For many business mailers, Commercial Base and Commercial Plus pricing and thresholds are major concerns. Commercial Base prices are discounted prices available to shippers who use online and other authorized postage payment methods, and Commercial Plus pricing applies to large-volume shippers.
An average increase of 5 percent to Express Mail actually includes a 5 percent decrease to Commercial Plus prices, and the volume threshold for Commercial Plus Express Mail decreases from 6,000 to 5,000 pieces.
For Priority Mail, which is increasing by an average of 3.5 percent overall, there will be an average increase of 3.2 percent to Priority Mail Commercial Base prices, and an average increase of 2 percent to Priority Mail Commercial Plus prices. Additionally, the volume threshold for Priority Mail Commercial Plus customers is reducing from 100,000 to 75,000 total Priority Mail pieces in the previous calendar year.
For a full look at the changes planned for January 2, 2011, visit pe.usps.com. These changes reflect the rising costs of doing business for the USPS, as prices continue to increase for things like transportation, utilities and health care benefits.
For the Market Dominant or the "Mailing Service" category of products, the USPS can adjust prices in line with the Consumer Price Index (CPI) as allowed under the Postal Accountability and Enhancement Act of 2006 (PAEA).
The PAEA legislation also allows the USPS to request an exigent - or urgent - rate increase beyond the rate of inflation if it can prove that "exceptional and extraordinary circumstances" warrant such an increase.
That's where the current atmosphere of uncertainty comes into play.
In July, the USPS proposed an exigent request to raise rates beyond the CPI because of the recession and other factors that have caused mail volume to plummet. The Postal Regulatory Commission (PRC) denied the proposal in September, saying that the USPS failed to quantify the financial impact of the recession and how the rate increase relates to the loss of mail volume.
The USPS is appealing the ruling at the United States Court of Appeals for the District of Columbia Circuit, asking it to review the PRC's interpretation of exigency. The outcome of the court's ruling is not yet known.
Meanwhile, the USPS could continue its normal rate increases based on the rate of inflation, filing a new rate case sometime in 2011 for an increase within the CPI price cap. Or, it could file a recalculated exigent proposal later this year for review by the PRC.
Adding to the uncertainty is flexibility within even a CPI-based increase, which is averaged over all products within a particular class of mail. For example, lower margin products like small parcels could see a relatively higher increase compared to more efficient products like flats and letters, as long as the average increase is within the CPI price cap.
The bottom line is that there do not appear to be any quick answers available to mail managers. But even as the regulatory back-and-forth plays out, there are things you can do to position your business to succeed regardless of the outcome of this rate debate.
One key is having a link to this information and the ability to make sense of it. Some companies may devote resources to hire an in-house expert, while many count on an experienced third party service provider, with the knowledge and network to stay informed as the issues evolve. Whether in-house or contracted, your business needs a conduit to postal knowledge with real experience and a broad understanding of the industry.
If working with a third party works best for your business, look for a partner that can effectively manage your business relationship with the USPS on your behalf. Your partner should have personnel with experience within corporate mailrooms and experience working with, or for, the USPS.
Another key is automation technology, which can optimize efficiencies and control costs associated with your fundamental business mailing process. Automation can help streamline the upstream mail processes of sorting, weighing and applying postage to expedite the processing of flats, small parcels and bound printed matter before sending those pieces to the USPS for final delivery. It can also allow businesses to plug rate changes into their systems as they happen, ensuring proper postage and on-time delivery for your mail.
An investment in in-house automation technology may be cost-prohibitive for some companies, especially small- and medium-sized businesses with limited resources to devote beyond their core businesses. If that's the case for your company, working with a partner that already has advanced technology in place can be the most cost-effective way to automate your mailing processes.
This is an uncertain time for mailroom managers, but we're all hoping for the same outcome: an efficient USPS that will continue supporting the business mail industry with quality products and reasonable rates. Staying abreast of postal industry changes and incorporating automation technology into mailing processes can help mailrooms remain current and efficient, regardless of changes to the USPS rate structure.
Chet King, Postal Affairs Manager for UPS Mail Innovations, has more than 25 years of experience in the postal industry. Visit www.upsmailinnovations.com or call 1-800-500-2224 for more information about UPS Mail Innovations and its services.
