June 16, 2006

Rate Shock: Parcels
Many within the direct marketing industry are still in a state of shock after taking a look at the rates the U.S. Postal Service (USPS) has proposed for Standard Mail parcels weighing less than a pound. The proposed rates, if approved, would result in increases ranging as high as 99.6%! Oh sure, the Postal Service has proposed deepening the drop ship discounts for such parcels, but the drop ship incentives come nowhere near what would be needed to offset postal rate increases of this magnitude. For sure, not every Standard Mail parcel shipper will be facing 99% rate increases, but many fall very uncomfortably within the 30-40% range. I don't know how the USPS or the Postal Rate Commission defines "rate shock," but there's no doubt in my mind that increases that are more than 10 times the cumulative rate of inflation since rates last rose sure sound like rates that most definitely would induce rate shock. In fact, for some Standard Mail parcel shippers, the cost of the rate increase alone would consume some companies' total annual operating profit.

—Postcom

The U.S. Postal Service Board of Governors has approved a negotiated service agreement with Bookspan. Bookspan joins Capital One, Bank One (now JPMorgan Chase), Discover Financial Services Inc. and HSBC North America Holdings Inc. in having approved NSAs. The NSA gives Bookspan volume discounts on Standard letters used to solicit new members to the clubs. Though the NSA is structured to encourage more use of Standard letter volume, other classes will grow as well: As Bookspan increases membership in its book-order clubs, it will send more First Class Mail and fulfill more orders through USPS package services offerings.

—DM News

New Flat Specs
The USPS for some time has informally communicated to mailers that it would like to adopt a single set of polywrap specifications for automated flats. That does not mean that all the UFSM 1000 polywrap specs would be included in the new definition. More likely, the new polywrap specifications will be a blend of the two existing sets of specifications (UFSM 1000 and AFSM 100 polywrap specifications). The USPS feels that the new specification will continue to offer mailers a cost effective polywrap choice, but mailers definitely should push to see the specifications sooner rather than later.

—Postcom