Understanding Postal: Beyond Rising Postal Rates

Prepare for key classification changes next year.

This is a column for those who understand that they’re in the direct mail business. Believe it or not, many catalog marketers refuse to acknowledge this fact, even though some 30 percent to 40 percent of their operating costs come from mail-related marketing and fulfillment expenses.

Those in the direct mail business know all too well that postal rate cases usually are harbingers of rising postal costs. They also know that by the time higher rates are put into effect, they must have a plan in place to accommodate the rate and operational changes every rate case brings.

As you hopefully know by now, the U.S. Postal Service filed another request for higher rates and mail classification changes before the Postal Rate Commission earlier this year. Following about 12 months of deliberations, the new rates and requirements likely will go into effect next spring.

Catalogers should take note of several aspects of the present rate case:

The Postal Service is changing its mail classification system to better reflect the cost-causing characteristics associated with mail shape (e.g., letters, flats, parcels). It intends to align postal prices with the kind of machinery on which the mail piece is eligible for processing. For sure, this will mean the cost and price of flat-size catalog mail will be significantly higher than for letter-size mail. In short, if you’re already preparing letter-size, tabbed, automatable catalogs, continue to do so if you can justify such a decision based on the market’s response to your product.

Unlike previous cases, the Postal Service will be offering automation-rate eligibility to one size flat only, i.e., those pieces that meet the requirements for processing on the Postal Service’s Automation Flat Sorting Machine 100 (AFSM 100). Under the USPS’ proposal, the existing Domestic Mail Manual specifications for AFSM 100-compatible flats (DMM 301.3.3) most likely will apply to such mail.