Canada Post Boosts Rates as Part of Product Simplification Initiative

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TORONTO, Canada - Canada Post plans to hike postal rates by 8 to 20 percent beginning next January, the first increase in three years. The boost is part of a "product simplification initiative" to be launched in June.


The overhaul will mean Lettermail, Addressed Admail, Publications and Parcel Services will be classed in different pricing structures, and size, weight and machineablility requirements will change.


The initiative, whose details have not yet been finalized pending formal announcement in June, will also allow greater personalization of direct mail


Under the new proposals, Lettermail and Addressed Admail rates are expected to rise by 8 percent for short and long letters and 20 percent for oversized mail.


Addressed Admail will be revamped to allow for unlimited personalization for mailable items which bear a uniform message promoting the sale or use of products or services.


This will include reports on financial performances sent primarily for promotional purposes and letters soliciting donations. At the moment, personalization is only permitted on the envelope.


Proposed changes to the discount structure include reducing the number of sortation categories from 20 to 6 and the elimination of the DCF and FCP presort categories. The National Distribution Guide is expected to be removed.


Business reply mail is set to change. Currently scheduled for implementation in September 1998, a non-refundable flat fee of C$350 will be charged to each business reply address annually.


This single fee replaces all previous application and account fees and eliminates the link to Lettermail prices.


A standard-sized machineable letter from 0-50g is expected to cost 55 cents Canadian. "Double dipping" will be abolished. This means if a customer affixes a stamp to a business reply envelope, the mailer will not be charged.


Proposed Lettermail changes include introducing a single weight step from 0-50g. Canada Post hopes this will encourage mailers to send advertising inserts with mailings such as statements and bills.


The volume threshold of 5,000 per deposit will continue but annual or monthly volume commitments will no longer be required.


Address accuracy penalties will change next March. The current 95 percent accuracy level will stay, but only the portion of letters below that level will be charged the full rate. This replaces the current practice of penalties on all the mail deposit if addresses are incorrect.


The parcel service will also change. Delivery confirmation, signature and additional insurance will be removed. Xpresspost will be speeded up to 1-2 days regionally.


"The Product Simplification Initiative will give direct mailers a clearer focus on what Canada Post can offer them," said John Caines, a spokesman for Canada Post.


"In general, the changes to Addressed Admail will mean direct marketers will better be able to target their audience because there will be greater personalization. Financial reports are being included in this category. This was always a stumbling block in the past," he added.


The Canadian Direct Marketing Association (CDMA) has worked closely with Canada Post executives to ensure that the redefinition of products and pricing recognizes the economic realities of database and customer relationship marketing.


CDMA welcomed changes to the Adressed Admail service since they will allow direct marketers to name their contact on and throughout a letter, instead of only on the envelope.


Up until now, Canada Post has strictly enforced its definition of Adressed Admail, which CDMA has branded as "unacceptable and unfair" and not "acknowledging the growing sophistication of direct response mail".


The CDMA has, however, expressed concern at the abolition of various sortation categories and the 1,000 piece threshold for smaller mailers, test panels and first time mailers.


The Association plans to continue to push for further amendments before Canada Post's June announcement.


"We've worked very long and hard for greater definition. The changes will reflect the realities of direct marketing today and the relationship between current direct marketing practice and technology," said Bonnie Wasser of the CDMA.


"While we never welcome price increases… we are very pleased that Canada Post has consulted with direct marketers through the Canadian Direct Marketing Association," she added.


Product Simplification will be discussed at four special sessions at the CDMA's annual trade show in Toronto this month.


Direct marketers will be advised how their mailings will be affected by the initiative and workshops will overview mail categories, discount variables, thresholds, address accuracy requirements, timing and pricing.
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