Rate Summit: USPS Considers NSAs

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The U.S. Postal Service may soon file a negotiated service agreement with the Postal Rate Commission, postal officials said yesterday at the ratemaking summit in Potomac, MD.

USPS chief marketing officer Anita J. Bizzotto said the agency "is getting close to signing on with a company," though she did not offer specifics.

Negotiated service agreements are special service and rate arrangements negotiated between the USPS and a mailer or group of mailers. Proponents say NSAs could provide variable pricing that would encourage greater volume and reward the postal service's major customers with discounts and premium services.

The USPS and the Postal Rate Commission called the summit, the first of its kind in postal history, to let interested parties discuss new approaches for postal products and services. The first session in May drew more than 150 people, as did yesterday's session.

One panel yesterday offered customer perspectives on NSAs while another covered technical issues associated with NSAs. During both sessions, audience members and panelists -- which included large First-Class mailers, small mailers, direct marketers, postal officials, lawyers and postal experts -- made it clear they supported the concept of NSAs but said many unknowns still surrounded the concept.

"NSAs would be a great avenue for the postal service to work directly with the [companies] that have the most effect on future revenue and volumes," said panelist Kristen Johnson of Discover Financial Services, which sends millions of pieces of First-Class and Standard mail monthly. "NSAs would help [the USPS] ensure their future volumes as well as revenue in years ahead. This is especially important with the recent decline in mail volume."

Johnson said that as a large-volume mailer, "the largest percent of our mailing budget is postage, and as postage continues to increase, we are forced to re-evaluate how our marketing dollars would be best spent. There are many alternatives to advertising other than direct mail, so it's important for the postal service to focus on being customer-oriented and building strong partnerships with their current customers."

Still, she said many questions needed to be answered about NSAs.

"Who should be eligible, the owners of the mail or producers of the mail?" she said. "Should [NSAs] be based on tier structure, with greater incentives for higher volume? How would the rates be discounted, would it be an automatic discount? What should the duration be, a one-year agreement or a two-year agreement?"

Panelist Michael McBride, a lawyer representing Dow Jones, said Dow Jones also would be interested in signing on to an NSA with the postal service. Dow Jones uses the USPS to deliver some of its newspapers.

Another panelist, Jim Bowler of Publishers Clearing House, said his company has agreements "with several foreign postal administrations very similar to [NSAs], and they have been very successful."

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