Money: Postal Rate Increase to Drive Major Changes in Mailing Industry

With only four months to go until the most significant overhaul of postage rates in years, four out of five executives are unprepared for proposed price and rule changes destined to have a large impact on their business operations and marketing strategies.

A recent survey of more than 500 business executives nationwide indicated that 79 percent of respondents are unaware of the forecast changes in postal rates and regulations. The widespread lack of knowledge about an important business event cuts across all organizational sizes and all regions of the country.

The proposed overall 8.4 percent rate increase would bring the full cost of first class postage up to 42 cents from the current 39 cents, but that is only the most visible effect of sweeping changes to the 4,400 different postal rates now under consideration by the United States Postal Service’s (USPS) Regulatory Commission. Other proposed major changes include the introduction of shape-based pricing and, in a related development, new rules for address quality that will take effect as early as the summer.

“The anticipated overhaul of postal rates and rules has serious implications for business,” said Murray Martin, president and COO of Pitney Bowes, Stamford, Conn. “Smart companies are already planning ways to re-engineer their mailstream to make it less costly and far more effective than it has been in the past.”

Martin cited four simple steps that most companies can take to adjust to the proposed postal rates and rules:

1. Plan the Mailpiece. The expected rates would create an opportunity for savings through proper mailpiece planning. For example, as proposed, the second ounce of a first-class letter will be less expensive than the first ounce, so mailers who combine information from two different mailings into a single mailpiece can save money.

2. Pay Attention to Shape. The anticipated rates would give mailers a strong financial incentive to switch from flat (9x12˝) envelopes to standard #10 envelopes, reflecting the USPS’s lower costs for processing the smaller envelopes. Folding and inserting machines that capitalize on this incentive will make sense for more organizations under the proposed new rules. Parcels are similarly affected by shape-based pricing, and create additional opportunities to save through proper planning.