Schimek applies his 26-plus years of mailing industry experience to provide product management and strategic direction for Quadient’s mailing business, formerly known as Satori Software. As Senior Director of Postal Affairs for Quadient, Bob Schimek serves as primary liaison between Quadient and USPS on technical matters affecting the company’s mailing solutions, which include CASS and PAVE certified software, integrated 48-month NCOALink processing and post-sort solutions.
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As the mailing industry headed into the second half of 2018, more and more questions started to be raised around the Postal Service next price change and how should the industry plan and budget for this event. The Postal Service made it very clear that any price change would require Board of Governor approval before proceeding. While no specifics were ever provided, the general signal to the industry was “if Governors were approved”, the 2019 price change would be a relatively vanilla price change given that there would be very little time to get them up to speed and get the necessary approval. Based on that, many in the mailing industry budgeted for roughly a 2.5% increase for 2019.
The Senate finally approved two Postal Board of Governors on August 29, 2018.
September was used to quickly bring them up to speed and on October 10th the Postal Service submitted their USPS Governor approved price change to the Postal Regulatory Commission (PRC) for their review and approval. Between the available Consumer Price Index (CPI) and small amounts of carried over unused rate authority, the price increase for 2019 would be roughly a 2.5% increase at the mail class level.
While the price change is capped at the class level, the individual prices within each class can be changed any amount as long as it averages out at the class level.
As the mailing industry started reviewing the proposed prices for 2019, it quickly became apparent that there were several parts of this price change that were far from the vanilla price change with some prices being increased well above the 2.5% mail class level cap.
- First Class mail will see the single piece stamp price jump 10% from 50 cents to 55 cents. This 5-cent increase took much of the available CPI for the mail class. This means that the First Class Presort had a below CPI increase with most of the rates increasing a little over one percent.
- Periodical mail saw the closest to “vanilla” price change of the classes of mail, but even in this class of mail there were still some winners and losers. In general the larger volume, heavier publications will see a less than CPI increase and the smaller, lighter publications will see an above CPI increase.
- Marketing Mail saw saturation, high density plus, and high-density rates get hit the hardest with a well above CPI increase. Some saturation mailers are seeing price increases as much as triple CPI with an 8% increase. Every Door Direct Mail (EDDM) prices will also see increases over 5%. It should also be noted that he Full Service discount is being increased from 0.1 cents per piece to 0.3 cents per piece, which will not be the same as the First Class discount for Full Service mail.
The Postal Service also introduced some new concepts in this price change.
Dimensional (DIM) weight pricing is being introduced for Priority Mail, Priority Mail Express, and Parcel Select. This will complicate postage calculation because instead of paying postage based only on the weight of the piece, parcels that are large and light will be subject to this new DIM pricing calculation and pay whichever is greater. Another new concept being introduced is zone rates for First Class Parcels. Both of these changes have the mailing industry very concerned regarding the small amount of time available to implement these new concepts in postage calculation logic. As currently proposed, these price changes, if approved by the PRC, will be implemented on January 27, 2019.
The industry was happy to see the 2019 price change also include a full calendar of promotions. Essentially all the promotions that were run in 2017 are now back again for 2019. It should be noted there are some modifications to some of the requirements for these promotions with slightly modified timeframes for when the promotions are being run. Some changes to note include that the Earn Value promotion will be 3 cents per piece in 2019 compared to 5 cents per piece in 2017. The postal service also split out the Informed Delivery promotion to be its own standalone item. If you haven’t done an Informed Delivery campaign, now is the time to start looking into doing one, the promotion doesn’t start until later in 2019, so you have time to start working with it before it goes into effect.
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