Is There Light at the End of the Postal Tunnel?

At that time, we’ll also argue that the rates should reflect the lower processing costs for flat-shaped mail that will come with the new flats sequence sortation (FSS) system. (Ironically, in the week that the Postal Regulatory Commission announced those huge postal rate increases for flats, the USPS awarded a contract of more than $800 million for FSS machines.)

We’ll all be in a learning curve on how the new rate-change procedures will work. But plan for a consumer price index (CPI)-based rate increase in the 3 percent range in May or June of 2008, followed by annual CPI-based increases in May or June in future years. This being said, the USPS does have the ability to raise rates of different types of mail within the same mail classification. But the average for the whole class can’t exceed the CPI cap. For example, flats could receive a slightly higher than CPI increase while the rest of the class received a lower than CPI increase, such as a 3 percent to 4 percent increase for flats, while other mail types within the class receive a 2 percent to 2.5 percent increase.

In the meantime, work with your suppliers to ensure you have clean, up-to-date mailing lists. Also, test new mail shapes and work with your printers to obtain the highest level of mail presortation possible. Those efforts will be rewarded no matter what future postage rates will bring. The DMA will be fighting to prevent huge rate swings — that’s why we fought 12 years for postal reform that included a CPI cap.

Finally, don’t forget negotiated service agreements (NSA) with the USPS. They can be another answer to high postage costs. It’s the DMA’s hope that we can work to have NSAs available not only to a single company, but also to a group of companies. Thus, smaller mailers could benefit from NSAs as well. The law allows the USPS to enter into these agreements to benefit its operations. This could include increasing volumes; bundling services (using automated address correction with First Class mail, for example); improving efficiency (e.g., using intelligent bar code,), etc. All NSAs originate with ideas from mailers brought to the USPS. Historically, NSAs require mailers to engage in legal and economic counsel. The DMA can and will assist its members along the way in the process, including initial consultations with our counsels.