Tuesday, February 10, 2009

Publishers' Postage Hikes Will Vary Widely

Some publishers will see their postal costs rise significantly in May, while others may actually get a decrease.

The Postal Service announced today that Periodicals postage rates will increase 3.97% on May 11, but that's an average. With the changes in specific rates for outside-county flats ranging from a decrease of 25% to an increase of 1,650% (!), there will definitely be winners and losers with these rate changes.

Perhaps the biggest winners will be relatively heavy publications with reasonable sortation (mostly carrier-route and 5-digit bundles) and dropshipped pallets. I see some situations where publications weighing one pound per copy will pay less postage.

By contrast, an equally efficient lightweight publication (averaging 0.2 pounds per copy) would see postage costs rise more than 6%. Likely to suffer even higher increases than that are titles with relatively poor sortation, extensive use of sacks, and little dropshipping.

Just a couple of years ago, postal officials resisted the idea of moving the Periodicals class to cost-based rates -- that is, charging mailers based on what it actually costs to deliver their publications. But with USPS billions of dollars in the red and Periodicals apparently not even covering their direct costs, postal officials are moving away from subsidizing inefficient mailing practices.

The current rates include charges for bundles, pallets, and sacks that cover only a fraction of the Postal Service's handling costs. In rough terms, the new rates will triple the bundle rates, increase most pallet charges by 40% to 80%, and increase most sack rates by 16% to 30%. And they'll still cover only about half the handling costs -- so be prepared for more hefty increases in these categories in years to come.

By contrast, weight-based charges will generally decrease, and most piece costs are barely budging except in the least efficient categories.

A new item that has not been fully explained would provide a discount of 1/10 of a cent per piece for copies with the full-service Intelligent Mail option when that becomes available in November.

I'll be offering more analysis and commentary on the new Periodicals rates in the coming days. Feel free to email me your comments (at Dead.Tree.Edition@gmail.com). If you send me the Form 3541 for an actual mailing, I'll even do the analysis and tell you how much the postage would change with the new rates.

No comments: