Mailing Systems Technology Publishes New Article by Vincent DeAngelis
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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 which was the expected available Consumer Price Index (CPI) amount.
The Senate finally approved two Postal Board of Governors on August 29, 2018 and then 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 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.
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. 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 looking over the rate filing, there were some prices being increased well above the 2.5% cap at the mail class level.
- 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 a “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 the Full Service discount is being increased from 0.1 cents per piece to 0.3 cents per piece which will now 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. This price change item received a significant amount of industry pushback, noting that many parcel mailers would need to invest in equipment to support DIM weight pricing. It was also noted that the majority of parcel mailers enter a system lockdown period though the busy holiday mailing period and required software changes to support DIM weight pricing could not be made. Based on the feedback the Postal Board of Governors along with the PRC have both approved the delay of DIM weight pricing until June 23, 2019.
Another new concept being introduced is zone rates for First Class Parcels. This change also received concern from the mailing industry regarding the small amount of time available to implement this new concepts in postage calculation logic. Unlike DIM weight pricing, this new zoning remains on track to be implemented with the price change on January 27, 2019.
The industry was happy to see the 2019 price change also included 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. Some have slightly modified timeframes for when the promotions are being run. 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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