The Elephant Has Ears: Some Good News for Mailers Along With the Rate Hikes

In announcing rate increases yesterday, the U.S. Postal Service actually managed to win praise from many mailers.

It’s not that the new rate structures scheduled to take effect April 17 are particularly innovative. In many cases, they are merely less bad than other recent Postal Service price moves, both actual and attempted.

What especially pleased the mailing industry is that "Elephant Plaza", as some refer to the USPS HQ at L'Enfant Plaza showed yesterday that it is actually listening and responding to mailers, especially in regard to the flawed Intelligent Mail program. We got a hint of that last week with Postmaster General Pat Donohoe’s executive reorganization (see Donahoe, No Potter Clone, Quickly Making His Mark), but the signals were even clearer Thursday.

“Recognizing ongoing concerns about mailers’ readiness for broader adoption of the Intelligent Mail barcode (IMb, which Dead Tree Edition has relabeled as the FUBAR code), the USPS has decided that automation discounts for mail with POSTNET barcodes will continue to be offered beyond May 2011,” a USPS announcement said. In other words, mailers will not be severely punished (yet) for sticking with traditional barcodes.

A postal executive also acknowledged to a mailing industry briefing that the PostalOne! information system, which many mailers and mail vendors have to use and suffer through, is a mess. “No s*%t, Sherlock!” one publishing executive responded later. Also, Donahoe originally told mailing industry representatives yesterday morning that the new rates would take effect March 27, but they persuaded him that was too soon to implement.

"Overall, it was an incredible breath of fresh air for the mailing industry," Hamilton Davison, head of the American Catalog Mailers Assocaition, wrote to ACMA members. "The meeting signaled a real willingness on the part of Mr. Donahoe and the USPS to work on substantive issues and customer concerns. This is exactly the right move for a high fixed-cost institution that ultimately must grow its way out of financial difficulties."

The rate filing included two changes from past practice that will put millions of dollars more of mailers’ money into Postal Service coffers. The rates will take effect a month sooner than previous rate increases. For future years, the Postal Service plans to continue implementing new rates in April rather than May.

Also, the price cap was calculated based on annual changes in inflation through November 2010. If the Postal Service had followed its usual practice of waiting for today’s release of the December 2010 Consumer Price Index, the rate cap would have been 1.64% instead of 1.741%. (See USPS Delay Means Smaller Price Increases for Mailers for background on the timing issue.)

The new Periodicals rates don’t really fix any of the problems with the current rate structure, but at least they won’t exacerbate the problems much. The 9.8-cent gap between the Basic Carrier Route and 5-Digit Automated piece rates will be maintained, which is good news for co-mailing publishers (and for the printers than run co-mail operations).

Still, efficient mailers will take a bit more of a hit than average once again, with rate increases for some approaching 2.5%. (Do Postal Execs Want To Lose Money on Periodicals? Tough Question #4 For USPS has more background on this tendency with Periodicals rates.)

The Postal Service has made noises about encouraging the use of pallets and of dropshipping, but that hardly showed up in the new rates. There is still no meaningful discount for using Network Distribution Centers, which would encourage dropshipping by small publishers. And the rate increases for sacks were all below the 1.767% average for Outside County Periodicals.

All individual Outside County Periodicals rate changes will be in the narrow range of 0% to 3%.

Most efficient catalog mailers will also be hit a bit harder than inefficient ones. The average increase for Basic Carrier Route sent via Standard mail will be 1.4%, versus only 0.8% for non-Carrier Route Standard flats. Some catalogs and free publications that use Standard mail will actually see small rate decreases.