June 14 2007 08:56 AM

As the mail industry faces an avalanche of changing regulations - new postage rates, added DPV requirements, expansion of Move Update rules to include Standard Mail, etc. - it is interesting to note which trends in mail processing may have influenced these decisions as well as what trends supersede them. Understanding these trends will help to better predict a path of future changes.


The following are major trends that could significantly impact planning and operational adjustments for high-volume mailers.


Standard Mail up, First-Class down

The futurists who predicted that electronic communications would toll the death knell of mail so far have been wrong. While it is true that the volume of First-Class Mail decreased from 98.1 billion pieces in 2005 to 97.6 billion in 2006 (-0.5 percent), Standard Mail actually rose from 100.9 billion to 102.5 billion (+1.5 percent). Combined with other classes, the total mail volume also increased 0.7 percent from 2005 to 2006, from 211.7 billion to 213.1 billion. Reaching back even further, we can see that from 2000 to 2006 First-Class Mail volume decreased 5.7 percent while Standard Mail increased 13.8 percent.


USPS® rate incentive toward letters

According to the U.S. Postal Service, the new rate case that took effect May 14 shifts from weight- to shape-based, better aligns prices with processing costs, and provides incentives for mailers to configure their mail into shapes that reduce processing costs. While the cost of a 3-oz. First-Class flat will increase from 87 cents to $1.14, the cost of a 3-oz. First-Class letter will actually decrease from 86.4 cents to 75 cents. In addition, the weight for automatable letters will increase from 3 oz to 3.5 oz., expanding the number of pages that can qualify for automated First-Class Mail. In many instances, a simple design reconfiguration or fold to fit into a 6" x 9" envelope reaps the savings from automation-friendly regulations.


Mail processing facility consolidation

In just one example of organizations engaged in high-volume transaction output, the telecom industry continues to undergo significant consolidation. Since 2004, the industry has witnessed the consolidation of SBC with AT&T and BellSouth, MCI with Verizon, and Nextel with Sprint. As a result, the number of facilities processing landline telecom mail dropped from 17 to nine in three years. Merging companies means merging mailing operations, which will continually be pushed to improve output while cutting costs.


Consolidation and USPS shape-based pricing force innovation

Consolidation has presented merged companies with the opportunity to redesign their bills to maximize consumer information and enhance branding. For example, simple black and white text documents are being replaced with more appealing documents that include graphics, bar codes, reformatted text and pages, charts, color and better print file formats. The USPS incentive to shift work from flat to folded is driving innovations in high-capacity, high-speed inserting systems that can accommodate as many as 16 to 20 folded pages and automatically change settings for different applications. Output of mail processing equipment can be "optimized" by manipulating the print streams, thus increasing throughput while maintaining proper mail sortation.


USPS changes encourage more consolidation/co-mingling

As described above, consolidation is occurring on the "customer" side of the mailing industry. On the "postal" side, USPS is also encouraging consolidation through changes in the discount rates. These changes compel a mailer to consider high-speed sorting to co-mingle their mail streams to maximize postage discounts and lower transportation costs. USPS has encouraged this consolidation through a dramatic increase in the discount "spreads" for 5-digit mail. This change is most dramatic in First-Class Mail where the 3-digit to 5-digit "spread" increased by 47 percent. It is also dramatic in Standard Mail where USPS increased drop-ship transportation discounts by 50 percent and 56 percent, respectively, to USPS Bulk Mail Centers (BMCs) and Sectional Center Facilities (SCFs). The combined effect of significantly increased 5-digit and drop-ship discounts compel a mailer more than ever before to co-mingle as much of their mail streams as possible to maximize postage discounts and ensure efficient transportation costs.


ADF expands with better barcode, utilization and tracking

In a typical automated document factory (ADF) environment, individual mailpieces and jobs can be tracked within the facility using unique identifiers. Job and mailpiece tracking provide real-time details on the status of each order and job, performance of resources and operators, and which production processes are over- or underutilized. With USPS OneCode Vision®, utilizing the 4-state barcode, the tracking capability is extended beyond just the mailroom into the mail stream, where individual mailpieces can be tracked through to the recipient's local post office. Applying unique identifiers on return envelopes also allows mailers to track when checks, completed forms, etc., are on their way back to the mailer, thus completing the mail cycle. The new OneCode Vision should dramatically accelerate the adoption of mailpiece tracking once this barcode format is mandated by USPS in 2009. Using OneCode Vision will simply be a matter of "clicking an option" within a mailer's postal software environment.


DPV requirement

The goal of Delivery Point Validation is to reduce undeliverable-as-addressed (UAA) mail through the identification and removal of mailpieces being sent to nonexistent addresses.

As of Aug. 1, 2007, USPS will require all addresses claiming an automation rate discount to have the primary number of the address (e.g., house number) be DPV confirmed by CASS certified software. If a mailing does not qualify for DPV, the mailer must pay full price.


Primary cost drivers: postage and volume

It's no surprise that the total cost per mailpiece decreases as volume increases, and that realizing cost savings is desirable for any mailing operation. Among the factors negatively affecting cost per mailpiece are volume loss, increasing postage costs, increasing metering costs, increase in set sizes, marketing or legal requirements, and integrity and/or reporting requirements. However, smart mailers can explore solutions that positively impact cost per mailpiece. These solutions include volume increase, alternative metering, postal discounts, move from flats to folded, increasing machine utilization, and efficient high-speed processing.


Given the multitude of trends impacting mail processing, what's a mailer to do? Successful mailing operations are constantly anticipating and responding to change in a manner that exploits new technology and pricing breaks. Here are a few things you can do to better respond to these trends:

·         Monitor and anticipate USPS industry changes

·         Invest in higher-speed, yet flexible, processing equipment

·         Utilize available software tools to minimize processing and postage costs

·         Explore new business opportunities for existing facilities

·         Use software tools for scheduling, monitoring and quality control


 is vertical markets director for BÖWE BELL + HOWELL, a leading provider of document processing and postal solutions. For more information, visit www.bowebellhowell.com.