Postal Affairs Blog

The major small package shipping companies have announced their new rates for 2010, which become effective on January 4, 2010. FedEx_® announced an average increase of 4.9 percent, as did UPS™. Both companies announced increases for ground shipping options of 4.9%, with higher increases for expedited and international shipments. The higher increases, around 6.9%, are being offset somewhat by lowering the fuel surcharges by 2%. It is important to note that along with the increase to their base rates, UPS and FedEx are also increasing their accessorial charges and surcharges. It is important for shippers to take these additional increases into account as well as the base price increases, as the accessorial charges can really add up.

 The United States Postal Service^® (USPS^®) announced increases on their shipping prices of 3.3% on average. The USPS price structure does not include accessorial charges such as residential delivery, Saturday delivery or fuel surcharges.

 USPS Price Percentage Changes by Category

For companies who ship packages in bulk quantities, there are reduced rate Commercial Base prices and Commercial Plus prices. Commercial Base pricing reflects a savings of 5% to 10% over retail prices, depending on the shipping category. Commercial Base pricing is available for qualifying Express Mail, Priority Mail, Global Express Guaranteed, Express Mail International and Priority Mail International shippers. There are varying qualifying criteria for each category of shipper, such as using Permit, PC Postage, Click-N-Ship, or an approved Information Based Indicia (IBI) metering device.

 Commercial Plus prices are available for large volume shippers who meet the criteria for Commercial Base pricing, and who ship more than 100,000 Priority Mail packages per year, or more than 6,000 Express Mail packages per year, or who have a customer commitment agreement with the Postal Service. The savings over Retail prices for this category range from 9.6% for Priority Mail to 14.5% for Express Mail.

 The USPS also made some other interesting changes in their rate structure for 2010:

• There are some rates that are actually going DOWN! The retail price for Priority Mail Flat Rate Envelopes went down from $4.95 to $4.90.  These Priority Mail flat rate envelopes are already a super deal, so this rate reduction makes them even more attractive. Like the TV commercials say, “If it fits, it ships.” For mailers shipping in bulk quantities, they may be able to qualify for even lower rates if they meet the qualification requirements for Commercial Base or Commercial Plus pricing.
• The Priority Mail one pound price is now zoned (previously mailpieces under 1 lb. were the same price, regardless of the zone). I’m not sure why the USPS would want to complicate the rate structure with this move, so we’ll see what impact it has on shipping volumes.
• There is a “new” half-pound price for Commercial Plus items.
• The USPS added new Cubic Volume Commercial Plus price tiers (5 tiers) to encourage smaller & more space-efficient packaging. Cubic Volume is based on size rather than weight: the smaller the package, the lower the price (even if it’s up to 20 lbs.). Shippers should be able to save a lot of money using this option, both in packaging materials and in shipping charges. Shippers still have the option to use the weight-based rates.

The United States Postal Service^® (USPS^®) announced some modifications to the current mail verification processes during the recent Mailers Technical Advisory Committee (MTAC) meetings and in webinars presented to mailers last week. These changes to the verification processes became effective with the implementation of the Intelligent Mail^® (IM) discounts on November 29, 2009.

For the most part, the USPS will conduct mail verifications using the same procedures as in the past. For IM Full Service mailings, the USPS has introduced hand-held scanning units, called FS-IMD’s, that will be used by acceptance clerks to collect data samples from mailpieces and tags on containers and mail handling units (sack tags, tray tags, pallet placards, etc.). These scanners have been deployed only to acceptance units with high volumes of mail, so not all acceptance units will be subject to these verification changes. It has not been made clear what, if any, mail verification changes will take place at acceptance units not provided with these scanning units.

The additional scanning steps that have been added to the verification process at these acceptance units equipped with the scanners are as follows:

Clerk identifies Full Service mailing on the PostalOne! system mailing dashboard.

Clerk uses the FS-IMD device to collect the following samples:

• scans 3 container placards,
• selects 1 of the scanned containers and scans 5 handling units,
• selects 3 out of the 5 handling units and scans 30 pieces – 10 piece from each of the handling units

Along with the discounts that became effective on November 29, 22009, mailings with the following errors will be subject to loss of the IM Full Service discounts:

• No electronic documentation submitted to the PostalOne! system
• IMcb (Intelligent Mail Container Barcodes) container placards not placed outside of the container stretch-wrap
• No IMb (Intelligent Mail Barcode) on mail pieces (>3 pcs) The initial verification sample size is 30 pieces. If the clerk identifies more than 3 of the 30 pieces do not have the required IMb on the mail pieces the mailing will be disqualified for Full Service discounts (this is more than 10% error)
• No IMcb on container placards (>3) The initial sample requirement is 3 placards. If one placard is found to not have an IMcb on it then an additional 3 placards will be inspected. If more than 3 placards are missing the IMcb the mailing will be disqualified for Full Service discounts (this is more than 50% error)
• No IMtb (Intelligent Mail Tray Barcode) on handling unit label (>3) The initial sample requirement is 5 tray/sack labels. If one label is found to not have an IMtb on it then an additional 3 labels will be inspected. If more than 3 labels are missing the IMtb, the mailing will be disqualified for Full Service discounts (this is more than 37% error)

In cases where the error rate exceeds tolerances and the IM Full Service discounts are forfeited, the USPS will process postage statements for such mailings in the following manner:

• Acceptance personnel will process the electronic postage statement as submitted (discount applied)
• Acceptance personnel will then conduct a manual adjustment transaction for the loss of Full Service discount.

Other Full Service benefits, such as mail tracking or ACS corrections, may be impacted when mailings fail the IM verification, based upon the type of barcode failure. What is not so clear is what exactly those impacts are. I guess we will have to wait and see!

Other IM preparation errors, such as non-unique serial numbers in the IM barcodes, or lack of container information in FAST appointments for drop shipments, will not be subject to forfeiture of IM discounts until March 2010. The USPS will, however, be sharing feedback to the mailing industry on the quality of IM mailings so that necessary adjustments may be made prior to March 2010.

According to the USPS, internal training webinars have been conducted so that the appropriate acceptance staff will be well versed in the new procedures. Based on past experience, however, there will likely be some acceptance issues that mailers will experience. There are many elements of IM that are confusing to say the least, and the acceptance and assessment processes will be no different. One of the primary concerns of mailers is the accuracy of the existing MERLIN^® (Mail Evaluation Readability Lookup Instrument) testing equipment. The USPS has admitted that the software for the MERLIN equipment has not been updated to reflect the IM changes. As many flat-size mailers can attest, MERLIN testing for flat size mailpieces is prone to many errors, even prior to IM implementation.

For more details regarding these revised mail verification procedures, you should contact your local business mail entry unit, or refer to the USPS issued mail verification changes document on the USPS RIBBS site.