Mailers Are Ready for Rate Increase

Resigned and ready. That's how mailers describe themselves as the June 30 U.S. Postal Service rate increase draws near.

“Since the postal rate increase was announced earlier and was not a surprise, yes, we are fully on schedule in terms of updating our computer software with the appropriate rate increases,” said David Hochberg, spokesman at Lillian Vernon Corp., Rye, NY. “We will be mailing the same quantities of catalogs this year as we did last year. We are not increasing our circulation, but we are not decreasing our circulation, either.”

Scott Lorenz, director of postal operations and systems at Time Inc. in New York, said, “we completed our work about five weeks ago, and we are ready to go. Anything that mails after midnight on June 29 gets the new rates, and Time magazine, which we mail on Sunday [June 30], will be the first out of the gate.”

Rates rise an average of 7.7 percent June 30, a move the postal service estimates will generate $4.16 billion in additional revenue. Even so, the USPS expects a net loss of $1.5 billion by the end of the fiscal year in September. It estimates that annual mail volume will drop by 6 billion pieces, its most significant decline ever.

Standard Mail rates will increase 7.8 percent; Nonprofit Standard, 6.6 percent; Commercial Enhanced Carrier Route Standard Mail, 6.2 percent; and Nonprofit Enhanced Carrier Route Standard Mail, 6.5 percent. There will be a 6.4 percent increase for Parcel Post, 10.3 percent for periodicals sent outside the country, 13.5 percent for Priority Mail, 9.4 percent for Express Mail and 9 percent for Bound Printed Matter.

In other changes, Priority Mail has a new, 1-pound flat rate at $3.85. Postage for heavier pieces will vary by zone. An 8-ounce flat rate Express Mail letter will be $13.65.

Though this was the third round of increases in 18 months, after increases in January and July 2001, postmaster general John E. Potter has stated that there would be no more postal rate increases before calendar 2004.

Joseph E. Schick, director of postal affairs for Quad/Graphics Inc., said mail volumes at his company are down for the first half of the year but that he does not expect the rate increase to further decrease volumes. Quad/Graphics, New Berlin, WI, mails 6 billion magazines, catalogs, direct mail pieces and consolidated parcels a year.

“Our projections for the rest of the year are very conservative, but they have improved from the first six months,” Schick said. “Some clients will pull back on the volumes they mail after the increase, but for the most part, I have not heard that that is the specific reason for many clients to mail less. It's still the economy that is impacting our business.”

As for switching to the new rates June 30, Quad/Graphics said it is ready.

“Production issues related to preparation changes and distribution issues related to some new requirements in drop shipping have been made, and we're ready,” Schick said.

Mailers also must cope with new rules beginning June 30 that will require design changes to mail pieces. One new rule requires enhanced carrier route letter-size pieces mailed at high-density and saturation piece letter rates to meet physical standards for automation-compatible mail and have delivery point barcodes on them. Pieces that do not are subject to rates 0.5 cents to 0.8 cents higher.

“We had to minimally change the design of our mail pieces so that we would not be charged higher rates,” said Maggie Noss, director of admissions for the Maryland College of Art and Design in Silver Spring, MD. “Instead of placing the address above a tab, we switched it so that address is above the fold of the mail piece, and the tab is over the address.”

Postal presort software vendors are prepared, despite concerns from some vendors that arose earlier this month about last-minute changes in international fees.

“All of our customers have everything they need, even the international stuff,” said Chris Lein, postal affairs director and market director for postal products at Firstlogic, La Crosse, WI.

Group 1, Lanham, MD, also said it is ready.

“We have been PAVE-certified since May 24, and our customers have received their software and some are already using it in production,” said Tim King, vice president of postal affairs and product management. “All software to our 900-plus MailStream Plus customers was shipped by May 31.”

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