USPS Unveils Shape-Based Pricing Plans

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The U.S. Postal Service has proposed rules to encourage mail preparation compatible with the agency's improved processing capabilities, including the depositing of flats and parcels closer to where they are delivered.

The proposal, published Sept. 27 in the Federal Register, would accompany the price changes expected to take effect next spring under the current rate case.

"The proposed mailing standards ... offer our customers more choices in terms of shape, sorting, packaging and using containers to encourage the production of efficient, effective mail," USPS spokesman David Partenheimer said.

The USPS filed May 3 with the Postal Rate Commission for an average 8.5 percent rate increase. The PRC is expected to make a recommendation to the postal service's Board of Governors on the case in March. Postmaster General John E. Potter told USPS business customers Sept. 20 that the agency must prepare for a possible May 6 rate change date.

The proposed prices recognize that each shape of mail piece - letter, flat and parcel - has substantially different processing costs that need to be covered, the USPS said in the Sept. 27 filing.

"Our current prices do not distinguish between shapes as much as they could," the filing said. "For example, in First Class Mail, our current price is 63 cents for a 2-ounce piece regardless of whether it is a letter, flat or parcel."

The USPS said its proposal offers mailers opportunities to mitigate the effect of price increases.

"If the contents of a First Class Mail flat are folded and placed into a letter-size envelope, the mailer could save as much as 20 cents," the USPS said. "If a parcel is reconfigured as a flat, the mailer could save up to 38 cents."

Christopher Lien, director of commercial mail marketing for Business Objects, a postal automation vendor, said the most notable aspect of the rate case is "the shift from mail production toward what I would call mail planning.

"The shape, rather than the weight or content of the mail piece, is going to be the driving factor in determining postage rates and work-sharing opportunities," he said. "This is not surprising when you consider that the USPS has to leverage their postal automation investment in order to continue to keep costs down. I would imagine that the more astute mailers are going to invest in business intelligence tools to forecast the most cost-effective piece to create, sort and containerize given that postage rates and sortation rules are going to get far more complicated."

Mr. Lien said he has followed this rate case closely and found few surprises.

"One thing I did notice, though, was the comment regarding the July 2009 requirement of matching ZIP+4 addresses to CASS-certified software for all discounted mail," he said. "This appears to be another aggressive step toward reducing [undeliverable-as-addressed] mail and improving overall address quality."

The Federal Register notice is at http://www.access.gpo.gov/su_docs/fedreg/a060927c.html. Comments are being accepted through Nov. 13. Send written comments to the Manager of Mailing Standards, U.S. Postal Service, 475 L'Enfant Plaza SW, Room 3436, Washington, DC 20260-3436.

Mailers had urged postal officials to provide more information on the proposed mailing standards. Historically, the USPS has published such proposed rules late in rate case procedures. This has become more problematic as businesses need the information to make critical planning decisions.

"While new standards won't be implemented until the proposed price changes take effect next spring, we wanted to let our customers know about our plans now and welcome their feedback and encourage them to comment on our proposal," Mr. Partenheimer said.

The proposed changes include:

Letters

* 3.5-ounce maximum weight for all First Class letters.

* Fewer presort requirements for First Class Mail and Standard Mail non-barcoded machinable letters.

* Full trays required for most Enhanced Carrier Route mail.

Flats

* All flats must be rectangular, flexible and uniformly thick. Nonrectangular, non-uniform or rigid pieces pay parcel or Not Flat-Machinable prices.

* Consistent size standards for all flats. For example, Standard Mail ECR flats will have the same maximum size as all other flats.

* Physical standards for automation flats adjusted to meet the current criteria for AFSM 100 pieces, with new standards for flexibility and deflection.

* New category for Standard pieces with parcel-like characteristics, including rigid pieces called Not Flat-Machinable pieces. Today, these pieces qualify as automation flats. These pieces are handled as parcels, especially at delivery. Under the new standards, these pieces will be presorted, entered and processed as parcels.

* Qualify for five-digit rates with minimum five-piece bundles on pallets for easier access to the lowest NFM price.

Parcels

* Minimum 10 pounds qualifies for presort rates.

* Simplify standards by eliminating almost all bundling of parcels.

* Enhanced discounts to encourage drop shipping parcels to destination delivery units, with no minimum volume requirement for parcels sorted to the five-digit level.

* Additional options to combine different classes of parcels in sacks and on pallets to achieve finer levels of presort as long as they are in the same processing category.

* Require barcoding of parcels unless prepared in five-digit containers.

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