Trends in Print and Mail

Sometime in the next month, the Postal Regulatory Commission (PRC) will complete their review of how the United States Postal Service (USPS) sets postage rates. There have been strong protests from several mailer associations against allowing the USPS to increase rates for Market Dominant products beyond the rate of inflation. On the other hand, the USPS has argued that the existing rules prevent them from establishing the rates necessary to cover their expenses.

As the prospects for legislative postal reform remain dim, the USPS needs more flexibility in setting rates. The CPI is a poor standard to use for postage rates, as most of the USPS expenses are for transportation and personnel. The price index for gas has consistently risen higher than CPI, as have health insurance rates. Ending the CPI cap will put the USPS on a stronger financial footing.

The PRC hasn’t indicated what their decision might be. They could leave the cap in place, they could modify the cap, or they could remove the cap altogether. Whatever they do, the USPS will then develop the proposed rates for 2018, probably releasing the pricing in October.

For most companies, October is too late in the planning cycle. Many of our clients are already submitting their preliminary 2018 budgets. For the past decade, managers could look up the CPI, add a few points as a buffer, and calculate their future postage costs. With no PRC decision, there are no guideposts to follow.

Predicting the future is a fool’s errand. Especially when it comes to political bodies like the PRC. However, not planning for the future is the hallmark of a fool. What’s a manager to do?

It’s probable that the PRC will lift the price cap on Market Dominant prices, with some type of controls. Postmaster General Brennan has repeatedly stated that the USPS want to grow the business of mail. A drastic rate increase won’t help them reach that goal.

A reasonable rate increase would be 5%. This would bring rates close to where they would be if the Exigent Rate Increase wasn’t rolled back in 2016. Also, it’s consistent with the annual rate increases of both FedEx and UPS – not including the holiday surcharge both companies recently announced.

Most managers are asked to reduce spending, and a significant rate increase will be unwelcome news. Savvy leaders will need to look for other methods of limiting the impact. That starts with taking advantage of the heavier weights allowed for machinable letter mail. Mailings should be combined and householded to a single envelope. Wherever possible, flats that weigh less than 3.5 ounces should be redesigned for 6 x 9 letter envelopes.

Mailers need to take a second look at the Promotions & Incentive Programs for First-Class & USPS Marketing Mail. Savings that seemed small before will be key to offset additional expenses. Mail service providers can add value to relationships by finding ways to easily enroll customers in these programs.

While no one knows the amount, postage rates will increase in 2018. Managers should budget and plan accordingly.

The United States Postal Service (USPS) released their 3rd Quarter 2017 Financials last week, and as expected, the news wasn’t good. While the USPS continues to reduce expenses – down 2.4% – they weren’t able to generate enough income due to slumping mail volumes, resulting in a “controllable loss” of $587 million.

“Want of care does us more damage than want of knowledge.” – Ben Franklin

Recent incidents involving suspicious mail highlight the need for an effective mail center security plan, paired with ongoing training. In Kansas City, MO, a suspicious package that smelled like ammonia sickened several people at an IRS building. In Queensbury, NY a suspicious package delivered to the courthouse was sent through an X-ray machine, and officers observed an object that appeared to be a hand grenade.

Security in your mail center is always important, 365 days a year. Increased volumes in packages due to internet shopping can lead to a lax attitude. Managers must take a proactive approach towards security and awareness by reinforcing the basics, reexamining current plans, and increasing the amount of training.

For most of my career, I’ve been involved with requests for proposals (RFP). First, as a customer looking to purchase equipment and services. Next as a consultant, guiding my clients through the RFP process. Also as a vendor, responding to companies looking for a consultant.

Two things I’ve learned – first, there’s usually only one vendor who wins the business. Second, not every proposal submitted will be successful.

While many people were celebrating Independence Day with an extra-long weekend, the U.S. Postal Service (USPS) filed a price adjustment request with the Postal Regulatory Commission (PRC) on July 3, 2017. Under Docket No. R2017-7, the USPS seeks approval for changing how it verifies compliance with Move Update and to increase the assessment charges for pieces that don’t meet the standard.

Move Update, the process for updating names and addresses, is required by USPS if mailers want to receive discounted postage rates. Mailers who use the exceptional address format (e.g., Jane Doe or Current Resident) do not have to meet this requirement.

The Postal Service offers mailers four approved and two alternative Move Update methods:

After reviewing several options, a client decided to outsource the production and mailing of certain documents. We helped them identify vendors who had experience with their industry, and with their purchasing department, published a Request for Proposals (RFP). Using the weighted scoring approach, the team further narrowed the list of vendors to 3 finalists. References were called, site visits were completed, and the vendors made their final presentations.

“You've got to think about big things while you're doing small things, so that all the small things go in the right direction." - Alvin Toffler

There are many business books that emphasize “focus”. Focus on your strengths. Focus on your core business. Focus Daniel-san. Okay, that last phrase was from “The Karate Kid” movie, but the message is the same one many consultants and gurus exhort to their customers and audiences.

But what happens if you’re too focused? People may direct so much attention on a particular problem, and miss everything else. If you have tunnel vision, you can’t the big picture.

Since the arrival of the ZIP Code in 1963, mailers have worked hard to meet the addressing and sorting requirements established by the U.S. Postal Service (USPS). Then came the ZIP+4, the Postnet Barcode, the Delivery Point Barcode and the Intelligent Mail Barcode (IMb). Each upgrade promised streamlined processing, consistent delivery and low postage rates. For most mailers, the USPS delivered on those promises.

Many mailers have held out on moving from the Basic IMb to the Full Service IMb, with accompanying mail.dat file and eDocs. Tracking MIDs, CRIDS and mail piece IDs often require a significant investment in software, databases and customer buy-in. For smaller mailers and mail service providers, the extra work required wasn’t worth the $0.003 per piece discount.

That’s about to change. For 2 reasons – Informed Delivery and Informed Visibility.

Last week was one of the largest National Postal Forums (NPF) in a decade, with more than 4,400 people attending the show over 4 days. With the theme of “Make Informed Connections”, the NPF was filled with opportunities for vendors to connect with customers, mailers to connect with postal executives, and industry professionals to connect with each other.

What are your plans for upcoming National Postal Forum (NPF), May 21 – 24, 2017 in Baltimore, MD?

The theme for this year’s NPF is “Making Informed Connections”. That includes networking with fellow mail professionals, vendors, and officials from the U.S. Postal Service. We’re especially looking forward to Postmaster General Megan Brennan’s keynote on Monday morning and hearing her take on the ratemaking review and the most recent attempt at postal reform legislation.