Understanding Postal: Get Smart

If you mail at automation-discounted postal rates, your catalog will have to meet a host of new requirements next January, including the USPS’s Intelligent Mail Barcode (IMB).

The USPS last month issued its proposed rules on the requirements that go along with automation rates starting in January 2009. It goes beyond the IMB, although that in and of itself is a significant change. The Postal Service’s proposed rules would no longer allow the POSTNET barcode, which has been in use for nearly two decades, to qualify for automation discounts beginning in January 2009.

It’s not clear what will happen to pieces mailed after January 2009 with POSTNET barcodes only. But one thing the USPS has made certain is that they will not qualify for automation postal rates. The USPS may not reject the pieces outright, but having the POSTNET barcode won’t qualify them for automation rates.

What Kind of Barcode?
The IMB is a 65-bar, four-state (e.g., four different types of bars in the code) barcode that contains 31 digits of data. These encode:
* the delivery-point address routing code used by the USPS to sort and track mail;
* any special services requested by the mailer, such as Address Change Service or Confirm;
* the class of mail and mailer’s ID code (a new feature being introduced with IMB); and
* the unique identity of the mail piece.

The IMB holds nearly three times the data of POSTNET and can be printed using the same technology — the key to its attraction to the USPS and mail users. It can’t be deciphered by the human eye, however, which raises new quality-control challenges in mail production.

While the USPS provides software and fonts to produce the IMB, and most postal software vendors have or will incorporate it into their software, conversion’s not as simple as flipping a switch. More data is required to generate the IMB. The process is much more complex and may require extensive system or software modifications. Technical information and resources are available from the USPS’s technical information Web site (http://ribbs.usps.gov/onecodesolution).

Two Options for Automation Rates
The USPS proposes two automation rate options with IMB, and both may be tied to two different rates in the future.

1. The “full-service” option requires that IMB is used on all pieces (letters and flats) in the mailing, and that other IMBs be used on all trays, sacks and containers. Catalogers must also submit postage statements and mailing documentation to the USPS electronically, and schedule drop-ship appointments through the USPS’s Facility Access and Shipment Tracking (FAST) system for mail that’s drop-shipped or entered at a detached mail unit. Along with a potentially lower automation rate (see below), catalogers using this option receive free address correction services and mail-induction information — also known as “start-the-clock” data for service performance measurement.

2. The “basic” option still requires the use of the IMB on all letters and flats — but with less stringent requirements. It doesn’t require electronic postage statements/documentation or the use of FAST. At a minimum, the IMB in the basic option must include the same delivery-point address code as in the POSTNET barcode today, as well as a Mailer ID, the class of mail and the Optional Endorsement Line if one is used on the mail piece — unless an adhesive barcode presort label is used. Catalogs using the basic option wouldn't receive free address correction services or mail-induction information.

Converting to IMB will be much more difficult than converting to POSTNET. Still, barcode conversion might be the easiest of the new requirements to meet in practical terms. Catalogers need to start looking at these issues now when there's time to make adjustments or raise the alarm. Beyond the difficulties catalogers may encounter, those wishing to use the full-service option, which could have the most attractive postal rate in the future, will face more hurdles, including creating those unique mail piece identification numbers and nesting into postal containers.

Figuring Out the Unknown
In addition to all the proposed requirements to qualify for automation rates, the kick in the pants is that we don’t yet know what the new automation rates might be. In mid-February, the USPS announced its first annual CPI-capped rate increase under the new postal law, to take effect on May 12. While the USPS didn't include IMB automation rates, it could do so by issuing a midstream pricing change before the next annual rate increase. Observers think the USPS hasn't decided yet how to price the IMB options or which extra services to include to make full-service appealing.

Because two different levels of service are proposed, one with many more requirements, the USPS will probably propose different automation rates to accompany these options. We may see a lower rate for “full-service” IMB and a higher one for “basic.”

Catalogers should look at IMB conversion and the changes they need to make to comply with the proposed electronic documentation requirements now. This may be difficult in the short term since the requirements aren’t finalized, but it’s one of those times the USPS needs to hear from catalogers and other mail users, as well as their printers and service providers, about their ability to meet the requirements by January 2009. The USPS has set up an e-mail address for mail users to share their concerns and questions around the IMB/documentation requirements (imb@usps.gov).

If you don’t pay attention to these requirements as they're developing, the loss of automation rates could mean a huge postage increase for your company.

Kathy J. Siviter is president of Postal Consulting Services, a postal issues consulting firm. She formerly served with the USPS and the Association for Postal Commerce and has 11 years of experience in all areas of postal operations. You can reach her at (703) 237-1740 or kathys@postalconsulting.com.