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BOG Approves NSA, Priority Mail Test

The U.S. Postal Service Board of Governors has accepted two recommended decisions from the Postal Rate Commission.

One was for a three-year negotiated service agreement between the USPS and Discover Financial Services Inc., Riverwoods, IL, a business unit of Morgan Stanley. The other was for a USPS proposal for a two-year experiment to test two flat-rate Priority Mail boxes. The PRC's NSA decision was issued Sept. 30, the Priority Mail decision Oct. 6.

NSAs are special service and rate arrangements negotiated between the USPS and a mailer or group of mailers. Proponents say NSAs will encourage greater volume by rewarding the postal service's major customers with discounts and premium services.

Discover's NSA is based on two functional elements: address correction and a declining block rate volume discount. The company is eligible for discounts of 2.5 cents to 4.5 cents per piece if its annual First-Class bulk volume exceeds 405 million pieces. The discounts rise with volume, and they are in addition to reductions given for automated First-Class letters that are presorted by ZIP code and carrier route.

The USPS will not return undeliverable First-Class mail solicitations under the agreement. Instead, Discover would receive electronic address corrections. There are no fees for the electronic address corrections.

The board said the waiver of fees for address corrections begins Nov. 1. All other aspects of the agreement take effect Jan. 1, 2005.

Also, the board said the flat-rate Priority Mail boxes will be available starting Nov. 20 at post offices and on USPS.com.

The rate for the boxes is $7.70, regardless of package weight and destination. The USPS chose the rate for customer convenience. Two Priority Mail $3.85 stamps will cover the postage exactly, with no need to look up zone charts or weigh the parcel. Consumers or businesses, however, can put any type of stamps or meter strips on the boxes.

One box will be similar to a clothing gift box (14 x 12 x 3.5 inches) while the other will resemble a shoebox (11.2 x 8.75 x 6 inches). The dimensions give customers the same packing space with different shapes to choose from.

If the USPS files a request to establish a permanent flat-rate box classification before the end of the two-year test, the experiment may be extended.

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