Archive for the 'Uncategorized' Category

David Robinson provided a easy reference overview of the proposed USPS Exigent Rate Case.

On July 6^th, 2010 the USPS filed an exigency rate case with the PRC.  The PRC has until October 4^th, 2010 to respond and can approve as is, deny the request, or approve based on recommended changes.  The USPS is requesting that the proposed changes go into effect January 2, 2011. 

 With a revenue shortfall of an estimated $7.0 billion for 2011, the USPS is taking a multi-pronged approach.  The proposed Exigency rate increase will add approximately $2.3 billion in new revenue for the USPS, but still leaves $4.7 billion in shortfall. 

For the longer-term fix to the USPS’ financial issues, The USPS will also continue their efforts to encourage Congress changing, and in some cases removing legislation that prevents the USPS from “right-sizing” their business.   

As noted, the proposed Exigency rate increase not only includes rate changes, but also adds a couple on incentives to grow mail, new mail classifications and regulations changes. 

Now that we have a better understanding as to why the USPS submitted this proposed Exigency rate increase, let’s focus on the actual changes proposed

 Proposed Price Increase:

The average proposed price increase across mailing products is 5.6% (generally running 4 – 6% but there are some exceptions). 

 First Class:

• Letter – price increase range 4.5 – 6.3%
• Flat – price increase range 4.5 – 16%
• Parcel – price increase range 32 – 53.3%

–        Parcels (same price for 0 – 3oz)

–        Split FCM parcels into two categories

• Retail FCM parcels
• Commercial FCM parcels

Standard Class:

• Average price increase of 6.2%

–        Price Increase ranges 4.4 to 23.3%

–        Flats average increase of 5.1%

–        Not Flat Machinable (NFM) category goes away

• NFM/Parcels become Standard Parcels

–        Fulfillment Parcels

–        Marketing Parcels

• Heavy Automation Letters

–        New formula to pay flats piece and pound rate with discount tied to the non-dropshipped entry point and applicable density tier

• Standard Mail Flats

–        Automation prices for rigid flats is eliminated

Package Services:

• Average price increase of 6.8%

–        Bound Printed Matter (BPM) flats proposed increase of 5%

–        BPM parcels, single piece Parcel Post and Media/Library mail at 7%

–        Elimination of half-pound pricing for nonpresorted BPM parcels

–        BPM single piece weights rounded off to two decimals verses the current 4 decimals

Periodicals:

• Average price increase of 8.0%
• Proposed Periodicals Origin Pallets increase of 21%

Special Services:

• Confirm

–        Proposed increase of Platinum level of 25.6%

–        Proposed increase of Bronze and Silver levels of 4.0%

• Elimination of Stamped Envelopes bearing a Standard Mail stamp
• Changes to the PO Box handling Fee

Incentives:

• Reply Rides Free

–        BRM and CRM included in envelopes up to 1.2 ounces ride free

• Qualifying pieces must be automation First-Class letters
• Must use the Full-Service IMb
• Mailer will pay the 2oz rate and be credited the 2nd oz charge for qualifying pieces

–        2011 Saturation and High Density Mail

–        Discount / Credit on pieces exceeding volume thresholds

–        Commercial Saturation letters and flats – 22%

–        High density letters and flats – 13%

–        Non profit letters and flats  – 8%

Move Update:

• Move Update Performance Based Verification (PBV) Threshold Tolerance

–        Reduce from 30% to 25%

• $.07 per piece fee for failed pieces

Please join us for our upcoming webinar:

Postal Open Forum- Reviewing the Proposed Changes of the Mailing Standards

Register Now!

Rich Ferrante – Senior Sales Engineer

In my email yesterday regarding USPS’s proposed changes – one of the things I mentioned was the “Reply Rides Free” incentive. I thought I would provide a bit more insight as to what this is and what it means to us.

 The “Reply Rides Free” program provides an incentive for mailers to include more content in their Automation First-Class Mail letters by providing a postage credit for the extra weight. A mailer who include Business Reply or Courtesy Reply Envelopes or Cards in their First Class Mail piece would be able to add 2/10’s of an ounce – FREE. Mailers would pay for the First Ounce and, basically, USPS would pay for the price of the mailing the Reply Mail and/or promo piece  (the additional 2/10 oz.).

 Although this new program, “Reply Rides Free”, is generally in context with Reply Mail as the “Free 2/10 oz.”, mailers could also use it to Promote Products (Transpromo), provide additional information to customers or to Cross Promote. With additional room for Promotional or Advertising Messages, mailers can turn a business expense into a Profit Center by selling the Inserts to other advertisers.

 Now besides USPS promoting First Class Mail volume with this incentive – one of the “requirements” that can promote our MAIL360 is that the credit applies to First-Class Mail letters mailed under “Full-Service” IMb!

 At fist read – the requirements seem a little ambiguous – as in one place USPS talks about using the 2/10 oz. for promotional inserts and then in another they say that a BRM/CRM has to be included in the outbound mailpiece ??? What I believe they are saying – and it does have a bit of logic to it – is that as long as their is a BRM/CRM envelope included, which many mailers already include today – and mailers typically stay within/under the 1 oz. – then the mailer can use the additional “Free” weight for the promotional insert, etc.

 The USPS “Reply Rides Free” Requirements:

 1)    First-Class Mail Letters mailed under Full-Service Intelligent Mail

2)    Weighing more than 1 ounce up to 1.2 ounces qualify for 1 ounce price

3)    Include a Courtesy or Business Reply, Card or Envelope. The reply piece may be in the format of a reusable envelope.

4)    Meet threshold based on previous year’s volume

5)    Permit Reply Mail is not eligible for this program.

6)    The “Reply Rides Free” program will run from 1/2/2011 through 12/31/2011.

 Now there is a slight caveat to this – USPS is going to “Credit” the customer “after” the mailing. So at the time of mailing, the mailer pays the applicable 2 oz. price for these mailed pieces. And then credit back the amount paid for the 2nd oz. and mailpieces mailed during the 2011 calendar year when the Mailer’s Volume of Commercial Automation Letter-Size First-Class Mail meets a “pre-determined volume threshold”. All letter-size volume counts towards meeting the overall mail volume; however, only those letters mailed under Full-Service Intelligent Mail will be eligible for postage credit.

 I’m not clear on what the “pre-determined volume threshold” means but the “win-win” logic for the USPS by adding the requirement that the mailpiece has a BRM/CRM included is that USPS will get additional, incremental postage when the Reply Mail is sent back by the customer.

 Note: This is how “I” understand the  “Reply Rides Free” program however I’m sure as the year goes on – we’ll hear a lot more about this and as well as the other “proposed” 2011 changes.

David Robinson – Pitney Bowes, Postal Relations

At the recent Mailers Technical Advisory Committee (MTAC) update, there were several topics of significance being discussed which is what happens at MTAC.  Hot topics such as the Intelligent Mail barcode, Sarbanes Oxley (SOX) and even hints of Seamless Acceptance.

 As I step back and consider the theme of the recent Postal Service messaging and certainly the theme of MTAC, it is largely about the USPS working to have electronic submission of postage statements and to be able to verify and validate the accuracy of the statements as well as the quality of the physical mail.

 This is may be subtle at this time, but I caution us all not to overlook the significance of what the USPS is messaging to us in various ways.

 For example, we know that seamless acceptance is back in public discussion (it went quiet when the industry pushed back in the early IMb days).  With Tom Day’s recent statement about the IMb being used to determine address quality, this ties it all together for me in terms of what the USPS plans to do – and again, has informed us in differing ways. 

 I’m confident that the USPS has every intention of driving mailers to use electronic documentation (i.e., full-service IMb, the recent edoc requirement for comailers and copallitization mailers, and talk of seamless acceptance).  The benefits to the USPS are obvious so we can see why they would like us to get there. 

 This does raise an interesting point about how the USPS feels about the basic IMb implementation verses full-service and what it means to their ability to provide service measurement and reporting as well as address quality validation.  Certainly something to think about.

 So what can mailers do in anticipating the impact of the USPS initiatives in this area?  I suggest the following:

• Contact your Pitney Bowes representative at 800 123-1234 and put together a plan to review all possible feedback from the USPS (i.e., PBV, MicroStrategy Reports, etc.) and determine current levels of errors from the industry as well as errors from the USPS.  These discussions would be held in confidence as we recognize that we are sharing information that might reflect poorly on the processes in the event of a single poor mailing 
  • The critical point in this exercise is to determine how well positioned you are to meet the ever growing challenges of complying with the USPS initiates of moving to seamless acceptance and total address quality.  If we don’t manage this process, we will be continuously squeezed and the cost of compliance violations, appeals process and overall anxiety will grow – and none of us needs the additional pressure.

 Again, while there are lots of really important issues being discussed, we should take a step back and look at the bigger picture of where the USPS is going, and the likely short timeframe in which they will feel the need to get there.  We already know that they are under severe financial pressure, so every means of reducing their operating costs is on the table.

Systems affected:

Business Customer Gateway -including PostalOne! for both internal and external USPS customers- Sunday May 30 4am – 8am CST
full outage, inaccessible for use

FAST- Sunday May 30 4am – 8am CST
system completely unavailable for hardware replacement

Confirm Service - Sunday May 30 4am – 8am CST
full outage, website inaccessible
FTP data transmissions will be unaffected and happen at their regularly scheduled times