Per documents filed on the Postal Regulatory Commision website on August 11, this offer will only be open to mailers with a volume of 500,000 pieces of First Class Mail in the same period in 2007 and 2008. This only effects non-parcel (letter, flat and card) mailings. Furthermore, it will only apply to volume in excess of a “threshold” target. This threshold is calculated by determining the amount of growth (or shrinkage) in a mailer’s volume between 2007 and 2008, and applying the same percentage to their 2008 volume. The discount will thus reward any pieces in excess of  projected, normal volume.

At the end of the program period, a rebate will be posted to the mailer’s permit trust account. In order to detect mail being held over from September or pulled forward from January, the 2007 and 2008 mail voluimes from those periods will also be examined and any drop in volume in those periods will be deducted from the mailer’s credited volume.

While this may result in modest revenue and volume gains for the USPS, the practice of targeting only the largest mailers may miss the mark. If the program were applied to all mailers, small businesses would have more incentive to use the mail. These small volume mail producers are most often overlooked by the big mailing firms. Besides the fact there are more small mailers than large ones, there is almost always more USPS revenue in 100 mailings of 1.000 pieces than in one mailing of 100,000 pieces.

Specifically, rates will increase for these classes of mail…

Domestic Services

Express Mail
Priority Mail
Parcel Select
Parcel Return

International Services

Global Express Guaranteed
Express Mail International
Priority Mail International
Airmail M Bags

Surprisingly, Bound Printed Matter rates will not increase, even though it’s package services cousin Parcel Select will. Standard Mail and First Class parcels will also not go up at this time.

The USPS news relase, with links to rate tables and files, can be found here.

Even with this rate increase, the USPS remains one of the best values in shipping. Especially for small parcels. They remain 7-14 percent below their competition in most classes. When comparing bulk rates, the differences can be much higher. Drop shipping and other advanced techniques can lower your costs even more.

Besides the obvious need to stay in line with USPS mailing policies, there are many compelling business reasons to comply, even if your primary class of mail isn’t effected, yet.

The USPS goal is to reduce the amount of Undeliverable As Addressed (UAA) mail. In 2006 alone, over 9.7 billion pieces of mail were sent out with addresses that could not be delivered. This cost almost $1.9 billion to process, forward, return, or destroy.

There are several factors that lead to a mailpiece being undeliverable. The recipient may have moved. The address could have a typo and be invalid. A rural route address may have been replaced with a “911″ street and number type address. All of these can be corrected by different processes.

The USPS has already moved to make DPV (Delivery Point Validation) a requirement for all Automation Rate mailings, which includes First Class, Standard Mail and Periodicals (like magazines). Now, during the CASS (Coding Accuracy Support System) process, an additional database is used to insure the address is an actual point that can be delivered. For example, Main Street may have address numbers ranging from 100 to 500. If a record has a number of 550, it would be rejected by DPV. By catching and correcting these pieces before printing and mailing, postage and processing delays can be saved.

The latest development is in the area of NCOA (National Change Of Address). Whenever you fill in a change of address card, or go to the USPS Change Of Address web page,  a record is generated in the NCOA master database. By comparing addresses against this database, a mailer can find the new address when someone has moved. Originally started as an optional service, NCOA is now required for First Class Mail. In November, NCOA will also be required for Standard Mail. Most people expect it to become a requirement for Periodicals next year. Another change occurring in November is that the mailing list must have been processed through NCOA within 95 days of the date of mailing. Previously, the standard was 185 days.

Normally, when a list is processed through NCOA, it is also run through LACS (Locatable Address Conversion System). This converts rural route addresses to street name / box number type addresses (911 addresses). This is often included with NCOA for no additional charge.

Mailers failing to comply with the Move Update rules stand to lose their automation discounts. This would apply to all the pieces in a given mailing, not just those pieces which couldn’t be delivered. Obviously any violation would also invite increased scrutiny of future mailings.

In the future, Compliance will be easier for the USPS to track. With the advent of the Intelligent Mail Barcode (IMB or OneCode), every piece will include a mailer ID field. Currently, USPS facilities close to the mailer can easily determine and track back to the mailer. With IMB, they will be able to identify the mailer at any level.

The IMB isn’t all bad news when it comes to Move Update. The Address Correction Service (ACS) is cheaper and easier to implement when you implement “full service” IMB. Each piece is assigned an unique ID. When the USPS forwards or fails to deliver a piece, and electronic letter is returned, which you can use to update your mailing list.

Besides the threat of losing automation discounts on current and future mailings, there are other reasons to use the Move Update resources. If you clean your list to include current, non-duplicate, deliverable addresses, you will mail fewer pieces, qualify for automation discounts, and your items will be delivered more quickly and accurately. These reasons alone will more than repay your efforts.

Originally, the plan was to force the mailing industry to drop the old Postnet bar code and change over to the IMB in January 2009. Even though they have adjusted their schedule, you should begin planning. There are already many benefits you may wish to take advantage of. Currently, you can continue using Postnet  until May 2010. It will still receive the base Automation discounts available with “Basic” IMB. “Full Service” IMB will receive an extra discount beginning in May 2009.

We’ll pause here for some definitions. Postnet is the old postal bar code that’s been  around for years. This is the pattern of tall and short bars underneath the address, or down in the lower right corner. If you wanted to do tracking, you could also add a Planet bar code. This  looked the same, but was usually placed on top of the address. If you wanted to use ACS (Address Correction Service),  more codes, in text, had to be placed above the address. If this sounds ugly and crowded, it was.  A lot of people avoided these advanced services for that reason alone. Here is an example address with Postnet, ACS and Planet codes. It’s not the sort of thing designers like to see on their artwork.

There are a lot of details to iron out. For example, the amount of discount between Full Service and Basic IMB is yet to  be defined. It is widely assumed, but hasn’t been confirmed, that Postnet will receive the same discount as Basic during the transition period. At this time, there is no implementation schedule for Business Reply Mail or Package Services. All this and much more will be decided in the coming months. A good place to learn more, and keep up with the latest developments is the dedicated USPS OneCode information website, located at http://ribbs.usps.gov/onecodesolution. We’ll also update this posting as more facts are revealed.

With dropping volume in letter mail, the USPS has been emphasizing their packages services in recent years. They have been particularly aggressive with flat rate Priority Mail boxes, targeted at eBay sellers, and Express Mail services. 

Two rule changes allow them to become even more competitive in the package services (shipping) market. They will now use zones to calculate the postage on  shipments that formerly had fixed prices, and they are now able to offer discounts based on mailing volume and source of sale (online shipments for example). 

Here are some of the details of the new shipping rates…

Here are the major changes to Priority Mail:

• Customers can pay less by buying online.
• Flat-Rate boxes are now offered in a new, 50% larger size, designed for businesses.
• A new, reduced Flat-Rate box price for APO and FPO (military) addresses.

The USPS has always been very effective in high volume situations. New prices will
leverage and expand this advantage.

Parcel Select is shaping up to be a very interesting service. We’ll concentrate on it further  in future discussions. In the meantime, you should check it out if you ship a lot of small parcels.  Bound Printed Matter has always been a very efficient method of shipping books. Parcel Select will spread the cost savings to other types of parcels.

Normal pricing will continue to apply to customers who come to the Post Office, but now they’ll find lower prices if they pay online, use corporate accounts, or meet minimum daily volumes.

Previously, USPS prices were a higher than other shippers for short distances and a lot lower for some long distances. With the move to zone-based pricing, their prices  will be more attractive for short distances — where most of the volume is — and still have a price advantage for more distant points. 

For pieces up to 5 pounds, USPS prices are better than FedEx for every zone. Express Mail is the only product with Sunday and holiday delivery (for a $12.50 premium). Unlike other shippers, the USPS has no Saturday delivery surcharge.

There are so many more subjects, there will have to be more articles. To summarize, the USPS is redefining itself to not only handle its traditional role of letter carrier, but to expand services to include package services, returns processing, and international shipping. They’ve always performed these tasks. They’re just shifting the balance of  their pricing and marketing to reflect the changing business environment.

The IMB, also known as the 4-state barcode, is a replacement of the older Postnet barcode used to assist the post office in routing First Class, Standard Mail and Periodicals based letters, flats and some parcels. You probably have already received mail using the new IMB code. Where Postnet had short and tall bars that were level on the bottom, the IMB “sticks out” on both the top and bottom. The reason for this is to increase the amount of data that can be stored in the code. In the original implementation plan, mailers were to be required to switch over to the IMB by January 2009. While there are still many reasons for mailers to convert as soon as possible, the new plans are more flexible.

Here is the text of the letter from the Postmaster General…

Thank you for your feedback on January’s Advance Notice of Proposed Rulemaking in the Federal Register concerning the implementation of the Intelligent Mail Barcode (IMB).

Your comments were thoughtful and thorough. I am encouraged by the number of responses received and the support of the IMB vision of true transparency, visibility and real-time data. It is all about increasing the value of the mail.

You also raised a number of implementation concerns that we need to address. Implementation of the IMB is so important to our future that I am taking the unusual step of giving you advance notice of some of the changes you can expect in the Proposed Rulemaking we plan to publish in the Federal Register next month.

Here is a preview:

• Many of you told us that January 2009 was too soon. We will propose a May 2009 implementation, concurrent with our next annual price change.
• We understand from you that many factors will drive the choice between the basic and full-service options. The May 2009 implementation will include separate prices for the full-service and basic option.
• The Postnet Barcode will remain eligible for an automation price until May 2010. Those prices will be announced with the May 2009 change.
• The proposal will include new options for mail owner identification.
• We are removing the requirement for green color bars on the container label.

Again, thanks for your responses. I encourage you to continue your implementation efforts and to comment on our next notice. Let’s work together to make the IMB vision a reality.