Before the Postal Storm Hits...What to Do Now

Plenty of mailers got their letters in to the U.S. Postal Service Board of Governors by the March 8 deadline, some protesting the horrific catalog postal rate increases recommended by the Postal Regulatory Commission (PRC). In fact, I checked with the Governors’ office this morning (March 9), and heard that the office received more than 1,000 letters — though not all necessarily concerning the killer catalog rates.

That’s a nice big number indeed, but I’m taking a glass half empty approach to this edition of The Corner View. That is, let’s go on the assumption that these unfair rates will be accepted by the Governors as is and implemented in early May. Why? Consider their options: They can do one of four things: accept them and implement them as is, accept them “under protest” (which, in essence, means the Governors ask the PRC to see if they can tweak the recommendations a bit, but that usually doesn’t amount to much, if any, change), reject them outright, which could lead to a whole new rate case that the USPS wouldn’t want; or request a modification of the recommendation, which could also necessitate a whole new rate case.

The DMA, NEMOA and countless catalog vendors did a great job rallying catalogers to fax in their letters of protest to the postal governors. Postal Service spokesperson David Partenheimer tells me that the Governors will vote on the PRC recommendations sometime next week. Don’t hold out hope that the Governors will reject the Commission’s recommendations outright. My sense is, they’ll accept them, either as is or under protest. Either way, tape up those windows, the storm is coming. Let’s talk about just what you can do to get your business through this.

Lessons From the Past

A few days after we broke the “hidden” story of the PRC catalog rate recommendations on our Web site and in a special edition of this newsletter, Mokrynskidirect president Dennis Bissig asked me if I had any suggestions for his catalog clients on ways they could cut costs enough to make up for the rate increases, which could run from about 10 percent to more than 40 percent for catalogers. Specifically, Dennis wanted to know what we could learn from past practice.

As a catalog/multichannel executive, you’ve no doubt spent the better part of your career initiating cost-cut after cost-cut to compensate for rising postage, paper costs, parcel shipping rates, you name it. If you think you’ve cut and cut to the point where there’s no more to cut, guess again. The question is, What costs are left that can be cut? Plenty.

If I were giving an oral presentation on this, now would come the “Can I see how many, by show of hands?” part where I’d ask catalogers in attendance this: How many of you cut your catalog’s trim-sizes or went to lighter paper weights in preparation for previous postage increases or paper price hikes?

Naturally, we’d see plenty of arms raised. No surprise there. If you’ve been in this business for at least a couple of decades, how could you forget the killer postage hikes of 1988, 1991 and 1995? But now the bigger question: As postal rates settled down in the late ‘90s and early 2000s, how many of you gradually migrated back to larger trim sizes and thicker paper stock? A-ha, look at all those hands raised. So let’s see what would make sense for catalogers in light of this pending postage hike.

Printers’ Suggestions

I contacted several catalog printers to see what ideas they could offer you. For starters, consider reducing the trim size of your catalog. A trim size reduction will normally lead to paper savings if catalogers work collaboratively with their printers to make sure that any size change fits the printer’s equipment, says Tom Hayes, vice president of business development at R.R. Donnelley. “Postage is a bit more complex in the USPS Standard Mail classification,” he adds, “where the vast majority of catalog mail falls.”

Hayes’ Points

1. For conventional catalog sizes (the 8” x 10.5” family of “flats”), moving to a smaller trim size will save postage only if the catalog weighs more than 3.3 oz today, Hayes notes. There is no postage price break for flat mail that weighs less than 3.3 oz., “assuming that the trim size change keeps the catalog in the flats classification.”

2. The more drastic change is to shift from a flat-size catalog to a letter-size catalog, he says. “Slim Jims” are generally 6-1/8” x 10-1/2”; “digest-size” is generally 5-1/4” x 8-1/4”. For a number of years — and most notably, of course, in the PRC’s recommendations, letter size Standard Mail gets a significant price break because the USPS has made considerable investments in equipment that automates the processing of this type of mail. But again, in order to qualify for letter size rates, catalogs must weigh less than 3.3 oz.

3. Printers will be requesting that catalogers standardize trim sizes in order to capture potential co-mail savings, Hayes says. Co-mailing normally requires some standardization in order to meet equipment specifications.

For more on letter size conversion, see Gene Del Polito’s Understanding Postal column from the January (print) issue of Catalog Success magazine, pg. 38. To access it online, go to www.catalogsuccess.com/story/story.bsp?sid=44117&var=story

Paper Cuts

As for cutting costs in paper grades, Dave Norman, director of purchasing for Arandell Corp., offers up a number of possibilities. For one, he points out that the brightness specifications of most of the traditional coated paper grades have changed over the past couple of years, which can impact how much you spend on paper going forward.

For instance, a couple of years ago, the American Forest and Paper Association (AFPA) revised its brightness/grade scale to try and maintain some sort of integrity in how paper was marketed and sold. Many of the mill-marketed #3 coated freesheet products meet the brightness specs of a #2, for example. That and other changes, he says, can work in catalogers’ favor.

Norman’s Suggestions

1. Today, he points out, “many papers are designed to look brighter and whiter under fluorescent lighting.” That’s because optical brightener agents have become increasingly popular and under fluorescent lighting, they give the illusion of whiter, brighter paper. So, he suggests, “Try to look at the samples in the actual light your end users will view the product.”

2. Don’t get hung up on the measured numbers of each sheet when comparing to others for brightness, opacity, and gloss. “The true comparison should always be with recently printed samples of each product,” Norman says. “Brightness numbers are often confused with shade. Gloss numbers will change after the ink and water hit the paper, and it takes an opacity difference of two points to be visible to the human eye.”

3. Don’t confuse per-hundred-weight pricing with total cost. “I would be leery of paper that does not contain a mill label on the wrapper,” Norman says. “Mill labels have ‘intelligence’ built into their roll numbers that allow material handlers and press operators to run rolls by deckle position that improves efficiency. They also ensure that the paper was made to spec and can be traced back to the original mill run.”

On the other hand, generically labeled paper can rarely be traced back to the mill of manufacture, it doesn’t typically have deckle position data, and can be off-spec to what the end user is expecting. As a final note, when per cwt pricing is the goal, the lowest pricing often, although not always, tends to gravitate back to the mills with the oldest equipment and the least quality of paper.

If you’re looking for per-hundred-weight pricing, which is often the cheapest, you’ll often find it at the mills with the oldest equipment and lowest-quality paper.

4. Don’t make assumptions about mill-grade number designations and groundwood content. Instead, Norman suggests that you look at recent printed samples and find the right paper for you.

5. Consider hi-bulking options, particularly in the lightweight coated #5 and uncoated offset grades. “A hi-bulking product will feel heavier (thicker) than other sheets with the same basis weight,” Norman says. “This allows you to print on a sheet that is lighter. That often gives you lower postal rates and more yield without you having to give up the ‘feel’ of a heavier weight product.”

6. When considering imported papers, remember that most of them are measured in grams per square meter, Norman says. As a result, basis weights don’t compare equally to domestic weights. For instance, 65- or 70-gram imported paper compares to 43.94# and 47.32# domestic and is often sold as 43# and 47#, respectively, as decimals are often dropped. That 2 percent difference, he says, is significant over the course of a larger run.

Further, imported paper tends to be flimsier than domestic paper of comparable weight. And because the USPS is bringing back the “droop test,” verify that imported papers meet the “droop” specs.

Lessons Learned

1. Plan now. You only have until early May when the new postal rates go into effect.

2. If you think you’ve cut all you can cut, think again. Or ask your vendors what they suggest. If the PRC rates are enacted as is, it’ll have been 16 years since the last postage increase of this magnitude.

3. Take a very close examination of the various paper grades and you’ll find a decent weight for less than you’re paying.