Wednesday, June 15, 2016

Nose of the Camel?: USPS Sneaks in a Rate Hike

Flats Ejection System: "Flyouts" plague FSS.
June 16, 2016 update: At 5 p.m. today, 19 hours after the article below was published, the U.S. Postal Service issued an Industry Alert entitled "Inadvertent Addition of New FSS Zones" as follows:

There were 27 new FSS zones inadvertently added to the July 1, 2016 effective L006 Labeling List as referenced in the Labeling List Changes section of the June 9, 2016 Postal Bulletin (22443). To resolve this action, the newly added zones will be removed from the L006 Labeling List effective August 1, 2016. In addition, mailers may take advantage of the 30-day grace period and opt to continue to use the June 2016 L006 list. Alternately, where the July list has already been implemented, software providers and mail service providers may remove the 27 zones from the list where applicable. The 27 zones to be removed are as follows: 02360, 02738-39, 02769-70, 02878, 02921, 07021, 07027, 07054, 07059, 07069, 07076, 07410, 07435, 07438, 07460, 07480, 23120, 23691, 64050-54, 64056, and 64058. 

Magazine publishers, newspapers, catalogers, and other senders of flat mail are slated to be hit with a backdoor postal rate increase next month.

Implemented without hearings, or regulatory approval, the rate hike will be tiny – a small fraction of 1% for most mailers. But the U.S. Postal Service has given mailers good reason to believe this is just the proverbial nose of the camel in the tent.

So don’t be surprised if there’s a legal challenge to block this precedent, as explained in Good Money After Bad? Mailers Try to Block FSS Expansion.

Officially, what the USPS posted last week in its Postal Bulletin was not a rate hike but rather a “Labeling List Change” – to have its Flats Sequencing System (FSS) machines process mail for an additional 29 ZIP codes. But the shift will mean higher costs for mailers because the postage on Standard, Periodicals, and Package Services flats are typically several cents per piece higher than what is paid for traditionally packaged mail.

No warm and fuzzy
More than 70% of non-FSS mail is presorted into carrier-route bundles, and“FSS is more costly [for the USPS] to process than Carrier Route prepared mail,” postal guru Joe Schick of Quad/Graphics wrote recently in FSS – A Four Letter Word.

“Despite all the discussions around FSS between the mailing industry and the USPS, we have never seen anything that would give us a warm fuzzy feeling about the ability of FSS to be the low-cost process it was intended to be,” Schick wrote.
Was the change "inadvertent"? Vote here.

No one has been able to squeeze a coherent explanation out of the USPS as to why it wants to shift more mail to a less efficient process. But we all know the reason.

It’s the same reason postal officials claim they haven’t bothered to measure the return on the $1.4 billion investment in the giant FSS machines: They don’t want to admit they made a mistake -- moving ahead with the FSS purchase despite the prototype failing two acceptance tests and despite knowing that the entire plan was based on inflated mail-volume projections.

When it comes to the FSS, postal officials are more concerned with CYA than ROI.

Other chapters in the FSS saga include: 

No comments: