Postal Rate Increase Packs Powerful Punch —Michelson
April 2007
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ALTHOUGH CONGRESS blew a kiss at the printing and mailing communities by passing long-overdue postal reform legislation in the waning hours before both chambers ajourned on December 9, the latest postal rate case has various industry factions worried that the increases could be the kiss of death for some classes of printed products. The hikes are scheduled to take effect next month, excluding a complex rate structure implemented for periodicals, which has been delayed until July 15. Rates will rise as much as 40 percent for catalogers—the hardest hit segment. At press time, however, the Postal Regulatory Commission was re-examining the Standard mail flats (catalogs) increase in response to widespread industry protest.
Even though part of the reform package passed by Congress includes a cap on postal rate increases limited to the Consumer Price Index (CPI) after 2008, another rate case can still be filed this December. The jury is still out on whether that will happen, although postal experts agree that any further increases certainly wouldn’t be of this magnitude. (For the worriers among us: Perhaps of even greater potential long-term concern is “Do Not Mail” legislation making the rounds within some state legislatures, largely driven by concerns about consumer privacy and identity theft.)
The various rate hikes are designed to reward mail that can be processed automatically by the U.S. Postal Service (USPS), hence a much greater emphasis on shaped-based mail designed as letters to drive greater USPS efficiency. Worksharing discounts also encourage the private sector to perform more tasks, albeit requiring investment in related equipment and software. A PRIMIR Executive Insight Report recently conducted by Interquest advises printers to co-mail and co-palletize when possible, to enter mail deeper into the postal system, to leverage worksharing for competitive advantage, and to offer more list and data management services. Smaller printers are also encouraged to work with consolidators to gain similar advantages.
Postal reform and rate hikes, obviously, put greater strain on the print vs. electronic communications debate. Although the impact on print volume is hard to assess due to rate design changes, Interquest predicts overall volume reductions from 2007 to 2010 of 2.9 percent for catalogs, 2.7 percent for periodicals and 2 percent for direct mail. The total impact will vary depending on sectors and business models, and how the market responds to the new shape-based rates, according to the researchers.
But, just as every dark cloud has a silver lining, the increases do present consultative opportunities. Since it’s now more imperative that printed products are designed for maximum postal discounts, printers and mailers need to get involved early on during the design and conception stages. And, with address quality and impending delivery point validation requirements, database management/list hygiene services (a growing profit center) become even more valuable. It will mean printing and mailing less pieces, but will help build better customer loyalty and ROI justification for print over the long haul.
Even though part of the reform package passed by Congress includes a cap on postal rate increases limited to the Consumer Price Index (CPI) after 2008, another rate case can still be filed this December. The jury is still out on whether that will happen, although postal experts agree that any further increases certainly wouldn’t be of this magnitude. (For the worriers among us: Perhaps of even greater potential long-term concern is “Do Not Mail” legislation making the rounds within some state legislatures, largely driven by concerns about consumer privacy and identity theft.)
The various rate hikes are designed to reward mail that can be processed automatically by the U.S. Postal Service (USPS), hence a much greater emphasis on shaped-based mail designed as letters to drive greater USPS efficiency. Worksharing discounts also encourage the private sector to perform more tasks, albeit requiring investment in related equipment and software. A PRIMIR Executive Insight Report recently conducted by Interquest advises printers to co-mail and co-palletize when possible, to enter mail deeper into the postal system, to leverage worksharing for competitive advantage, and to offer more list and data management services. Smaller printers are also encouraged to work with consolidators to gain similar advantages.
Postal reform and rate hikes, obviously, put greater strain on the print vs. electronic communications debate. Although the impact on print volume is hard to assess due to rate design changes, Interquest predicts overall volume reductions from 2007 to 2010 of 2.9 percent for catalogs, 2.7 percent for periodicals and 2 percent for direct mail. The total impact will vary depending on sectors and business models, and how the market responds to the new shape-based rates, according to the researchers.
But, just as every dark cloud has a silver lining, the increases do present consultative opportunities. Since it’s now more imperative that printed products are designed for maximum postal discounts, printers and mailers need to get involved early on during the design and conception stages. And, with address quality and impending delivery point validation requirements, database management/list hygiene services (a growing profit center) become even more valuable. It will mean printing and mailing less pieces, but will help build better customer loyalty and ROI justification for print over the long haul.
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