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SMC reports on postal rate details |
I am back from Washington with public and private news about the Postal Service's price adjustments. I am pleased to report that SMC's business volunteers, and advocacy team, received "the most favorable rates possible" (I am quoting someone from behind the scenes) that the Postal Service could propose. The volunteers who communicated with the Postal Service, and met with the Postal Service last year to talk about the growth opportunities for saturation mail, were successful in making the case that the Postal Service should reach out to retain and grow saturation mail volumes. I am attaching to this email materials and graphs prepared by SMC's legal counsel, Tom McLaughlin, that shows the specific change in rates for saturation flats, high density flats, and letters. There is also a "cut and paste" summary of the discussion and proposed rules on the Postal Service's New Incentive Program for New Saturation Mail Volumes.
Here are highlights of the case as it applies to saturation letters and flats:
The average increase for all postal products was 3.8%. Selected price adjustments for saturation mail are:
Saturation letters at SCF - 1.5%
Saturation flats at SCF - 1.3%
Saturation flats at DDU - 1.4%
No change in the saturation pound rate
No increase in the DAL surcharge. It is still $.017 dollars or 1.7¢.
Favorable increases in drop ship discounts.
NEW SATURATION MAIL VOLUME INCENTIVE PROGRAM
The Postal Service listened to our pitch that saturation mailers could grow new, incremental volume for the Postal Service by expanding geography or frequency. The Postal Service has implemented a limited time "experiment" to develop an incentive program for saturation mailers who increase their saturation Standard mail letters or flats volume. This program is new and an unprecedented. You can expect that everyone in private industry and at the USPS will spend some time figuring it out. I have attached the discussion and regulations that were released on it in a condensed form. (Thanks to Tom McLaughlin for cutting and pasting this down from the lengthy regulations).
Here are the highlights:
To participate a saturation mailer must demonstrate saturation mail volumes in 2007 and 2008 with a minimum of six saturation mailings in the 2008 calendar year.
Mailers wanting to participate must "submit a letter requesting participation to their District Manager, Business Mail Entry between February 11, 2009 and June 11, 2009."
The incentive is paid in the form of a credit to the postage paid "on the incremental saturation mailing volume" over prior volumes computed and credited sometime after May 10, 2010. The per piece credit is as follows:
Standard mail saturation letters: $0.037 per piece
Standard mail saturation flats: $0.04 per piece
The incentive program is annual and will begin on May 11, 2009. Approved participants demonstrating "an increase in saturation mail volume" and otherwise in accordance with the terms of the Postal Service program, will receive a credit to their specified CAPS account after the close of the annual program period.
The program has additional eligibility requirements that include the maintenance of a functioning Centralized Account Payment Systems (CAPS) account and the ability to submit mailing documentation electronically to the Postal Service using an approved method at the time of application and for the duration of the program.
We recognize that these difficult economic times may make it challenging or impossible for mailers to increase program frequency or circulation, but the Postal Service's efforts to give saturation mailers the lowest possible price increase, combined with this opportunity to get a credit against postage paid for new volumes, shows a tremendous step forward for the Postal Service in listening to the business opportunities presented by saturation mailers.
OTHER RATES
One of the requests made by SMC's leadership during the presentation to the Postal Service was for the Postal Service to widen the differential between the rates paid by full saturation mailers and high density mailers. Several presenters made the point that their saturation programs were hampered in the ability to compete with newspapers TMCs because the TMCs could always offer a better rate than the full saturation mailer. We noted that TMCs often use their blended postal and private carrier rate as a loss leader or offer rates that are below the pound rate postage that saturation mailers must pay to the USPS. Although the Postal Service did not give us the lower pound rate we requested, it did widen the gap between saturation rates and high density (TMC) rates. For high density pieces entered at the DDU, the percentage increase is 5.7% in the piece rate with an 11.2% increase in the pound rate. This differential should help SMC members compete with TMCs to attract heavier weight inserts and circulars at and above the break point.
The full chart of new prices and services runs 41 pages. It is available at usps.com/prices.
FURTHER UPDATES
There was nothing in the filing about changing the requirement to put a city style address on flat mail. We are still working to urge the Postal Service to adopt a form of "simplified but certified" addressing for city routes. When I know something - you will all know something. I hope to have something to report later this year.
Kudos and thank yous for the tireless work of Vince Giuliano and his Government Relations team at Valassis, and the executives at Valassis who make it possible for Vince and his advocacy team to present these issues to the Postal Service and postal regulators on a 24/7 basis. On the "behind the scenes" front, I was told by several people within the Postal Service, and other trade association leaders and mailers who were meeting with the Postal Service last year, that the industry presentation made to Postal Service officials by Pete Gorman, Albert Braunfisch, Harry Buckel, Dick Mandt, John Sabo, Carol Toomey, Steve McKinnon, Dean DeLuca, Bill Cotter, and Chet Cleaver, made a tremendous impression on the Postal Service. As a government regulated enterprise, facing enormous financial challenges and loss of volume, the Postal Service officials of Mailing Services, Marketing, and Pricing were enthused about the business opportunities and spirit of unprecedented industry cooperation they saw at our SMC/USPS presentation.
For more information -
A.N.N.E. meeting - I will be attending the entire A.N.N.E. meeting later this month and available to answer questions and share "behind the scenes" insights with A.N.N.E. members. I will do an official presentation on the rate and regulatory challenges we have handled this last year and are facing going forward.
AFCP meeting - I will attend the entire AFCP meeting in April and will host a breakout session on postal issues. At that meeting I will share the latest information I have on the rates, the new incentive program requirements, and other rate, regulatory, and legal news of interest to our members.
Donna E. Hanbery
Saturation Mailers Coalition
33 South Sixth Street, Suite 4040
Minneapolis, MN 55402
(612) 340-9350/direct dial
(612) 340-9446/fax
ana
Download the Supplementary Information re: Saturation Mail Volume Incentive Program for Standard Mail
Download the EXCEL spreadsheet re: 2009 ECR Rates
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Cheers,
Craig McMullin
AFCP
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