USPS to Experiment With Priority Mail Discounts

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The U.S. Postal Service Board of Governors yesterday approved plans to begin a two-year experiment offering special rates for presorted Priority Mail starting July 15.


The experimental rates include discounts for three presorting options: area distribution centers, which are mail processing facilities that represent a state or a large portion of a state; three-digit prefixes; and five-digit ZIP code sorts.


The discounts are 12 cents off per piece for sorting to the ADC level; 16 cents off per piece for sorting to the three-digit level; and 25 cents off per piece for sorting to the five-digit level. The proposed discounted rate categories would be additional options offered to mailers. Existing Priority Mail classifications would remain unchanged.


The USPS filed a case with the Postal Rate Commission in March seeking this experiment. The PRC approved the plan in late May.


"We are seeking to make Priority Mail more affordable and offer our customers more options and greater value," John F. Kelly, president of expedited/package services at the USPS, said when the case was filed with the PRC.


In January, the Board of Governors allowed under protest a 16 percent rate increase for Priority Mail. This compares with an average increase of 4.6 percent overall. In addition, Priority Mail postal rates will go up 0.9 percent July 1 as part of an across-the-board 1.6 percent average increase.


To receive the experimental discounts, mailers must meet certain containerization, preparation, minimum quantity and data collection requirements. The containerization and preparation requirements may vary by mailer location. The USPS expects to open the experimental rate with about 10 participants, and more mailers may be added later. There will be a small fixed fee to participate.


The purpose of the experiment is to measure the costs associated with mailer presorting and to determine whether incentives provided by the discount structure are attractive and beneficial to the mailing community.


While some mailers are happy about the experiment, others have questioned its viability, saying even larger mailers may have to hold on to mail pieces to get sufficient density required for the sort discounts at each level.


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