Understanding Postal: Spare Your Bottom-line

Despite the passage last month of the Postal Accountability and Enhancement Act, mailers soon will be faced with significant changes to the U.S. Postal Service’s Domestic Mail Classification Schedule, the document that serves as the regulatory framework for all postal rates and classifications.

In my last column (“Beyond Rising Postal Rates,” October 2006 issue, pgs. 66-67), I shared some of what the USPS proposed in its current postal rate case. Postmaster General John Potter has said that mailers should be ready for new rules and rates to be implemented by May 7. Prudent mailers will get ready to adapt to many changes by early May.

Part of the challenge that catalog marketers face in preparing for this is first to discern what’s being changed, and what impact the change will have on their businesses. For the moment, assume that you send many of your catalogs and other marketing materials to your prospective customers using one of the many rate subcategories of Standard Mail. Also assume that you fulfill many of your orders using the parcel services of Standard Mail or Parcel Post. With that, here’s a list of some of the changes that will be implemented along with new rates sometime in mid-2007.

1. The Postal Service is recasting its rates and classifications to more fully reflect the costs associated with the actual shape of a mail piece (i.e., letter-size, flat-size and parcel-shaped).

2. The USPS is changing its rate structure to closely align costs with mail’s automatability or machinability.

3. The USPS is tightening its flat mail eligibility criteria by providing more favorable rates to mail that can be processed on the Flat Sorting Machine (FSM) 100. It’s eliminating discount eligibility to pieces that previously could be processed on its FSM 1000.

4. The USPS is distinguishing what it calls “flat mail” into two separate categories. Automatable and Machinable Flat Mail, is reserved for FSM 100-compatible mail. Not Flats Machinable (NFM) is for pieces that don’t fit FSM 100 compatibility criteria. The Postal Service won’t really be treating NFMs as flats, but it also isn’t ready to reclassify such mail as parcels.