Understanding Postal: Spare Your Bottom-line

Despite the passage last month of the Postal Accountability and Enhancement Act, mailers soon will be faced with significant changes to the U.S. Postal Service’s Domestic Mail Classification Schedule, the document that serves as the regulatory framework for all postal rates and classifications.

In my last column (“Beyond Rising Postal Rates,” October 2006 issue, pgs. 66-67), I shared some of what the USPS proposed in its current postal rate case. Postmaster General John Potter has said that mailers should be ready for new rules and rates to be implemented by May 7. Prudent mailers will get ready to adapt to many changes by early May.

Part of the challenge that catalog marketers face in preparing for this is first to discern what’s being changed, and what impact the change will have on their businesses. For the moment, assume that you send many of your catalogs and other marketing materials to your prospective customers using one of the many rate subcategories of Standard Mail. Also assume that you fulfill many of your orders using the parcel services of Standard Mail or Parcel Post. With that, here’s a list of some of the changes that will be implemented along with new rates sometime in mid-2007.

1. The Postal Service is recasting its rates and classifications to more fully reflect the costs associated with the actual shape of a mail piece (i.e., letter-size, flat-size and parcel-shaped).

2. The USPS is changing its rate structure to closely align costs with mail’s automatability or machinability.

3. The USPS is tightening its flat mail eligibility criteria by providing more favorable rates to mail that can be processed on the Flat Sorting Machine (FSM) 100. It’s eliminating discount eligibility to pieces that previously could be processed on its FSM 1000.

4. The USPS is distinguishing what it calls “flat mail” into two separate categories. Automatable and Machinable Flat Mail, is reserved for FSM 100-compatible mail. Not Flats Machinable (NFM) is for pieces that don’t fit FSM 100 compatibility criteria. The Postal Service won’t really be treating NFMs as flats, but it also isn’t ready to reclassify such mail as parcels.

5. The USPS has proposed providing mailers with additional options to combine different classes of parcels in sacks and on pallets to achieve finer levels of sortation as long as they’re in the same processing category. The rules, however, are far from simple.

6. Effective July 2009, mailers will have to match their addresses against coding accuracy support system (CASS)-certified software and use the correct ZIP+4 code on each piece.

What You Can Do

That completes the understanding phase of this little exercise. Now, here’s what should you do.

• Unless your catalog already is the size of a letter, determine whether it’s feasible to trim it down to letter size. If you can get it down to 6-1/4 inches by 11-1/2 inches by 3/4 inches, if it weighs no more the 3.3 ounces, and if you can tab the pages, you should be able to qualify your catalog for letter-mail automation rates. Test, however, to ensure that reconfiguring your catalog doesn’t negatively affect response.

• If you can’t in good conscience (or business sense) convert your non-letter-size catalog to letter-size, then ensure that your catalog can be processed on the FSM 100 — it must be less than 3/4-inch thick.

• Barcoding such a piece should be a no-brainer. Adding the barcode earns you the automatable flat discount. Without the barcode, you’ll qualify only for machinable discount rates.

• If your catalog is thicker than 3/4 inches, or if it lacks the necessary flexibility to process on an FSM 100, you may be in for some trouble, because you’ll only be able to qualify your piece as NFM, and the proposed rates for this category are so high, they’re not even worth mentioning in this column.

Your first task, then, is to see if your NFM catalog can be reconfigured to qualify as an automatable (machinable) flat. If you’re going to stay configured as an NFM, have some very good business reasons for doing so, such as double the response of other sizes.

• Even though your catalog may meet the technical specifications for an NFM, consider preparing your mail in accordance with Standard Mail parcel rules.

Gene Del Polito is president of the Association for Postal Commerce, an industry group that represents the interests of companies that rely on the mail for their business. Contact: (703) 524-0096 or genedp@postcom.org.