USPS Defers Implementation of Full-Service Intelligent Mail Requirement for Automation Prices

Personally I believe this decision is in the best interest of the viability of the Post. There are too many small mailers that do not have the time or desire to comply with yet another mandated change in preparation requirements.  By delaying this, it should reduce the decline of the use of mail in the marketing mix.

This change should be incentive based, concurrent with the workshare savings it drives.  I like the carrot vs. stick approach.  Here is the press release:

The U.S. Postal Service is disappointed with the portion of last week’s ruling from the Postal Regulatory Commission (PRC) which held that the implementation of Full-Service Intelligent Mail barcode (IMb) constitutes a rate increase. This ill-conceived decision will impair complete adoption of Full-Service IMb and hinder the Postal Service’s ability to promote a technology that enhances the value of mail, which is critical to the development of next-generation digital products and services. The PRC’s overly expansive view of the price cap demonstrates why comprehensive postal reform legislation should include additional pricing authority for the Postal Service Board of Governors.

Due to the PRC ruling, the Postal Service is delaying the Jan. 26, 2014 implementation of the Full-Service Intelligent Mail requirement for automation price discounts. Mailers who are not currently enrolled in full-service effective Jan. 26, 2014 will still be able to claim automation prices. To achieve the best pricing, however, mailers must continue meeting full-service requirements.

Despite this delay, the Postal Service remains strongly committed to full-service adoption for all mailers. The value of full-service is well known and helps the mailing community to get the best value-added experience for its mail. The Postal Service will continue moving aggressively to achieve 100 percent visibility in the mail through full-service.

We encourage mailers to contact their Mail Service providers and Software vendors to help transition to full-service to get the full-service discount prices and access the benefits listed below.

We have developed an online Intelligent Mail Small Business tool that enables even the smallest mailers to take the first steps into full-service. The tool remains in place and local bulk mail entry units will continue assisting very small customers and provide them information on how they can use the small business tool to prepare mailings to receive automation and full-service discount prices.

Full-Service provides customers with:

·         An additional per piece discount on every Full-Service mailpiece.

·         Address correction information at no additional cost for Full-Service mailpieces, providing Change of Address (or COA) information and Nixie (or undeliverable-as-addressed) information.

·         The ability to track service performance through reports and scan information.

·         Container, Tray and Mailpiece visibility.

·         Annual permit fees will be waived when 90 percent or more of cumulative annual mailings consist of Full-Service mail.

·         The opportunity to use the same permit at any location via our Mail Anywhere program.

# # #

To learn about the benefits and requirements of full-service, visit our RIBBS website at http://ribbs.usps.gov. Click on Latest News under the Intelligent Mail Services tab to find the latest news on full-service – including the simplified process for testing full-service mailings. To expedite mailer’s participation in full-service, a list of authorized software vendors that have tested their products with the Postal Service can be found on RIBBS/Certifications/eDoc & Full-Service https://ribbs.usps.gov/index.cfm?page=electronicdoc.

For questions, contact your local Business Mail Entry Unit or the PostalOne! Help Desk at 1-800-522-9085 or via email at fullservice@usps.gov. 

PRC Rules on Postage Rate Hike, Exigent Ruling Due Next Month

By Ina Steiner  EcommerceBytes.com  November 25, 2013 The USPS can raise the price of a stamp from 46 to 47 cents in January, but whether the agency can raise it to 49 cents has yet to be decided. On Thursday, the Postal Regulatory Committee (PRC) approved the Postal Service's September request to raise Market Dominant rates in accordance with the rate of inflation as measured by the Consumer Price Index, but with one caveat having to do with its requirements for improved mail tracking called Intelligent Mail barcode - more on that below. But the USPS had also submitted a renewed exigent request in September asking to raise rates higher than the Consumer Price Index due to the 2007 - 2009 recession, and PRC Chairman Ruth Goldway told EcommerceBytes to expect that ruling in about a month, calling the exigent request "complicated." Note that the exigent request does not impact Competitive products such as Priority Mail, but does impact Market Dominant products, including First Class Mail. (See more on how Priority Mail rates will change in January. As a basis of comparison: Under the Market Dominant price adjustment, the cost of single-piece letters and cards would increase 1.141%, while the cost of parcels would increase 6.335%. (Note that the latter is higher than the overall increase for First-Class Mail because its cost coverage is 98.5 percent - in other words, the revenue generated doesn't cover its cost.) Under the exigent request, the cost of single-piece letters and cards would increase 4.276%, while the cost of parcels would increase 4.349%. The table above is a partial screenshot and doesn't include all classes of Market Dominant mail. The Exigent Request: History In March 2010, the USPS outlined a 10-year plan to address declining revenue and volume, including a call for a move to five-day delivery. It also filed a request for exigent rate increase, arguing a causal relationship between the recession of 2007 - 2009 and its dire financial predicament, and asking the PRC to approve the rate hike based on a sharp decline in mailing volumes "due to" the poor economy. PRC Chairman Goldway acknowledged the recession was an exigent circumstance but denied the request, because the Postal Service failed to quantify the impact of the recession on its finances and to show how its rate request related to the resulting loss of mail volume. The USPS took the matter to court, which sent the case back to the PRC in 2011, and in December of that year, the PRC issued Order No. 1059 in which it granted the Postal Service's motion to supplement the record and stated that, if the Postal Service wished to continue pursuing its exigent request, it would have to complete the submission of an entire case. The Exigent Request: Current Events The USPS held off on responding to Order No. 1059 in the hopes that Congress would pass postal reform legislation, saying it had considered it prudent to delay responding in the hopes that comprehensive legislation would provide sufficient financial relief, but said last month it had reached a position where it had to move forward. The USPS renewed its exigent request in September, characterizing it as reasonable. "While the Postal Service could have requested price increases equaling several billion dollars in contribution, it has limited itself to increases equaling $1.78 billion in annual contribution. It did so out of an abundance of caution. The Postal Service is mindful that mailers are also facing a slow recovery from the recession, and therefore it is being careful to avoid significant price increases." It also said that, "even if one were to focus only on the losses through 2009, the Postal Service's request for $1.78 billion in contribution represents less than half of the contribution lost due to the recession through 2009." One of the authors of the Postal Accountability and Enhancement Act of 2006 (PAEA), Maine Senator Susan Collins R-ME, submitted a letter to the Postal Regulatory Commission in September outlining her opposition to the USPS exigent rate request, arguing that the revenue losses resulted from "the effects of electronic diversion" rather than the recession. Goldway told EcommerceBytes last week that the concept of the PAEA was to provide for emergencies such as a hurricane that wiped out facilities in 3 states, or some emergency where the Postal Service couldn't deliver mail and lost a lot of revenue and needed to get money back, "so it would be an isolated instance and you'd have a surcharge on the rate to just pay for that. But this is more structural in nature, so is it okay to build in a permanent rate increase or should it be still be structured as a kind of surcharge?" The Exigent Request: Timing of the Decision "We have 90 days in which to do it," Goldway said, "and the 90 days end somewhere before Christmas, and then with the shutdown, we could take another 16, we're trying not to. So that decision won't come out until the earliest late next month. But the Postal Service has the permission to raise, for instance, First Class rates from 46 to 47 now, with the decision issued (last week)." The Regular CPI Request While normally the PRC would approve market dominant rate increases in line with the Consumer Price Index, this year it was complicated by something called the IMb. Effective January 26, 2014, the USPS is requiring a Full Service Intelligent Mail barcode (IMb) on all First-Class Mail postcards, letters, and flats, Standard Mail letters and flats, Periodicals letters and flats and Bound Printed Matter flats in order to qualify for automation discounts. (In other words, it affects volume mailers such as those in the Direct Marketing industry.) Parties filing comments about the request expressed concerns regarding the Postal Service's failure to include the impact of the mandatory requirements of Full Service IMb in its price cap calculation. One asserted that "If the Postal Service can increase revenue through changes in mailing rules, the Postal Service will be able to contrive, without limit, mailing rules that can drive mailers to more costly rate categories or classes of mail so that revenues will increase significantly without regard to the price cap limitations." The PRC determined that Full Service IMb mail preparation requirements were a classification change and that its effects must be included in its calculation of the percentage change in rates. "Concurrent implementation of the proposed rate adjustments and the Full Service IMb requirements would result in increases in First-Class Mail, Standard Mail, and Periodicals that exceed the statutory Consumer Price Index price cap, currently at 1.696 percent." According to the ruling, "The Postal Service may implement the proposed rate adjustments, minus the Full Service IMb requirements, effective January 26, 2014. Alternatively, the Postal Service may adjust its proposed rates for First-Class Mail, Standard Mail, and Periodicals rates in a manner comparable to the implementation of Full Service IMb requirements in Package Services and file amended rates." Goldway told EcommerceBytes, "Our job is to make sure the Postal Service raises prices no higher than the CPI for every class of mail." The Postal Service must notify the PRC of its intentions and provide necessary supporting documents by November 27, 2013. The USPS released a statement in response to the PRC's decision last week, calling it "ill-conceived" and stating it demonstrated why comprehensive postal reform legislation should include additional pricing authority for the Postal Service Board of Governors. "The Postal Service strongly believes that the PRC's decision hinders growth opportunities for the mailing industry and the Postal Service, and harms our efforts to ensure our financial stability. The Postal Service remains committed to 100 percent Full-Service IMb adoption and we will continue working to achieve this goal." In the meantime, mailers will have to wait until late next month when the PRC rules on the exigent request to learn if rates could rise even more dramatically.

About the author:Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

UPS 2014 Rate Increase was just announced.

Average increase of 4.9% for Ground, Air and International parcel products effective December 30, 2013.

As it has historically done, UPS Ground increases are higher at the lighter weights and less impacting at heavier weights (see chart below):

The 2014 Ground Minimum Charge is $6.24, a 6.8% increase from 2013.

For years, the UPS “Daily Rates” were better than FedEx’s list rates.  However, with the 2014 rate increase, the UPS Daily Rates are now a lot closer with FedEx, especially for 1-2 day service options.  On the whole, UPS Daily Rates are still less expensive for 3 Day Air than FedEx Express Saver, but it depends on weight and zone configurations.  

Again in 2014, UPS “Standard Rates” will match FedEx’s published rates.

UPS also announced increases to package surcharges and accessorial charges.  To preview rates and review surcharge increases, visit: http://rates.ups.com/surcharges.html.

FedEx’s average 3.9% rate increase for Express products takes effect January 6, 2014, one week after the UPS increase.  FedEx has not yet announced its 2014 Ground and FedEx Home Delivery increases, but it is expected to match UPS within the next few days.

It is important to note that FedEx maintains a more favorable fuel surcharge threshold than UPS for both Express and Ground packages (at current fuel prices).

A more comprehensive analysis from Shipware, LLC is forthcoming.

U.S. Postal Service Announces New Prices for 2014

Price increases expected to generate $2 billion in new revenue to improve financial situation 

WASHINGTON — The United States Postal Service today announced proposed price changes, including an increase in the price of a First-Class Mail single-piece letter from 46 cents to 49 cents. The proposed changes, which would go into effect in January 2014, are intended to generate $2 billion in incremental annual revenue for the Postal Service.

Highlights of the new single-piece First-Class Mail pricing, effective Jan. 26, 2014 include:

*         Letters (1 oz.) — 3-cent increase to 49 cents

*         Letters additional ounces — 1-cent increase to 21 cents

*         Letters to all international destinations (1 oz.) — $1.15

*         Postcards — 1-cent increase to 34 cents

Stamp prices have stayed consistent with the average annual rate of inflation of 4.2 percent since the Postal Service was formed in 1971.

 Pricing for Standard Mail, Periodicals, Package Services and Extra Services also will be adjusted as part of a filing to the Postal Regulatory Commission (PRC) scheduled to take place Sept. 26.

The Governors of the Postal Service voted Sept. 24 to seek price increases above the typical annual increases associated with changes in the Consumer Price Index (CPI).

In a letter disseminated to customers today, Board of Governors Chairman Mickey Barnett described the “precarious financial condition” of the Postal Service and the “uncertain path toward enactment of postal reform legislation” as primary reasons for seeking price changes above the CPI increase. He also indicated that the price adjustment above the CPI increase is necessary in order to ensure that the Postal Service will be able to maintain and continue the development of postal services of the type and quality which America needs.

 “Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges,” said Barnett in the letter. “However, if these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy. We are encouraged by the recent introduction of comprehensive postal reform legislation in Congress, and despite an uncertain legislative process, we are hopeful that legislation can be enacted this year.”

Except in exceptional or extraordinary circumstances, postage price increases are capped at the rate of inflation as measured by the CPI-U. The Postal Service is filing a price increase above CPI-U due to extraordinary and exceptional circumstances which have contributed to continued financial losses. The Postal Service recorded a $15.9 billion net loss last fiscal year and expects to record a loss of roughly $6 billion in the current fiscal year, and has an intolerably low level of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits. 

The PRC will review the prices before they become effective Jan. 26, 2014, and must agree the prices are consistent with applicable law. The new price proposals are scheduled to be filed Sept. 26 and will be available on the PRC website at www.prc.gov and also will be available at http://pe.usps.com.

The full text of the Board chairman’s letter sent to postal customers about the pricing decision will be available later today at the following link:

http://about.usps.com/news/national-releases/2013/pr13_chairman-letter.htm.

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

USPS Plans to Make Priority Mail a Guaranteed Delivery Service

By Ina Steiner 
EcommerceBytes.com 
August 19, 2013

U.S. Postmaster General Patrick R. Donahoe and Chief Marketing and Sales Officer Nagisa Manabe hosted a web conference call on Wednesday with reporters to discuss recent changes to Priority Mail and its new business strategy to drive USPS growth in the shipping marketplace.

In response to a post-briefing question, the Postal Service told EcommerceBytes that its future plans include moving to a guaranteed service for Priority Mail day-specific delivery.

Background - Changes to Priority Mail
On July 28, the USPS rebranded Express Mail to "Priority Mail Express," and added an estimated delivery time designation on shipping labels and in the USPS Tracking information. It also added free insurance for domestic Priority Mail ($50 for most customers, $100 in insurance for high-volume shippers who are Commercial Plus customers).

EcommerceBytes described the five things online sellers should know about the postal changes in this July 3rd Newsflash article and cleared up some questions sellers had about insurance in this July 9th article, but the changes were ushered in with little fanfare from the postal service until its August 14th press briefing.

Why the Changes?
The Postmaster General referred to the changes to Priority Mail as "a bright spot in the business in terms of an important refresh in one of our core offerings in our marketplace." As EcommerceBytes noted, the USPS experienced solid gains in the package business in its third fiscal quarter, which it attributed in large part to growth in ecommerce, when shipping and package revenue spiked 8.8 percent for the quarter.

"We do have some flexibility in our business model to innovate especially around the package side of the business," Donahoe told reporters. "We've taken advantage of those opportunities and will continue to do so," and he said the Priority Mail changes have great potential to drive new revenue.

The Postal Service's Manabe said in terms of business strategy, "our refresh of Priority Mail is really geared to fill some competitive gaps in the shipping marketplace, and by filling these gaps, we expect to drive strong revenue growth in our package business."

Manabe said ecommerce was the driving force behind the Postal Service's growth in the package delivery business. "People are ordering products online and are having them delivered at ever-increasing rates. We've been able to capitalize on that trend with shipping options that are secure, affordable, reliable, familiar and available in every geography. We've also been effective with innovations in our package category such as flat rate shipping and marketing efforts such as, "if it fits, it ships.""

Confusion over Day-Specific Delivery Designation
Effective July 28th, Priority Mail packages began displaying an estimated service of 1 day, 2 days, or 3 days - the estimated delivery date is displayed on the payment receipt, online shipping label and in the USPS Tracking information.

What causes some confusion is the fact that Priority Mail Express is a guaranteeddelivery date similar to services from UPS and Fedex, while the Priority Mail 1 Day, 2 Day, and 3 Day dates are not guaranteed - they are estimates based on the package's departure and ship-to location, a concept that many have trouble grasping when first encountering the delivery time designations.

EcommerceBytes asked if the delivery time designation took into account Sundays, and if not, whether there had been any thought to change 2-DAY to something more like "2-Business Days," for example. The response from a USPS spokesperson following the call was, "Day specific delivery follows normal, 6-day mail delivery business hours for the Postal Service. As most know, that's Mon-Saturday."

We also asked if there been any thought to add the word "estimate" to the delivery time designation. The spokesperson said, "Future plans do include moving to a guaranteed service for day-specific delivery. Customers can always opt for Priority Mail express for guaranteed service. The 1-2-3 day-specific delivery time is when we expect for the mail to arrive based on the origin and destination of the package."

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

PB selling its Managed Services division to Apollo Global Management in Q4

PBI announced they will be selling its managed services division to Apollo Global Management, LLC for about 400 Million dollars.  The deal is expected to close in the fourth quarter.

For the last 15 years many mid to large companies have outsourced their mail and document services to Facilities Management (FM) companies to concentrate on their core competencies

So what will this mean to the very competitive FM marketplace that frankly has very few competitors with national coverage?  Currently, virtually all of the (non PB) FM players shun PB mailing equipment and services since they are direct competitors.  Neopost and Hasler are the main beneficiaries of these relationships since they are the other large provider.

Will the new Apollo FM operation open up and allow their analysts freedom to choose the best qualified product value for the application or will the blinded loyalty to the PB brand continue?  If the former is adopted how will Ricoh, Oce and others respond?  Will they consider offering "that which shall not be named"?  This should be interesting to follow.

Details reported by the WSJ, 7/30/13: For its part, Pitney Bowes plans to focus on its mail and digital-commerce businesses. The company has been consolidating its business to reduce costs.

Pitney Bowes also reported that it swung to second-quarter loss of $4.6 million, or five cents a share, compared with year-earlier earnings of $104.2 million, or 50 cents a share. Excluding restructuring charges, write-downs and other items, adjusted earnings from continuing operations were up at 52 cents from 51 cents.

Revenue eased 0.7% to $1.16 billion as double-digit growth in its production mail and mail services mostly offset weakness in other areas.

Analysts polled by Thomson Reuters recently expected per-share earnings of 43 cents on revenue of $1.19 billion.

Pitney Bowes shares were up 1.8% at $14.99 in recent premarket trading. Apollo shares closed Monday at $26.60 and were inactive premarket.

House to consider the ending of Door to Door Delivery - "It's a Cluster ___"

7/25/2013

Yesterday it was announced that the House of Representatives panel working on Postal reform passed a proposal to eliminate curbside delivery by 2022. This includes deliveries to mailboxes at the end of driveways, and cluster box delivery would replace letter carriers slipping mail into front-door boxes. Estimated savings from this is 4.5 Billion annually.   This panel is headed by Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee and the measure is now heading for a full vote on House floor.

While giving the Post latitude to make more independent business decisions would be welcome, a new mandate to upset the public from Congress is not what is needed.  Its incredible that Congressman Issa continues to dodge the major challenges facing the USPS, created by Congress, that is making them leak red ink.  It is very confusing but like most government conspiracies it is important to follow the money. 

In 2002, the USPS Inspector General found that the Post had overpaid 80 Billion to the US Treasury for federal government  pensions.  A lot of former military found second careers at the USPS, these prior years of service count toward their federal pension and the Post was shouldering 100% of those costs. 

No one argues that the Post over paid, but Congress did not want to take an 80 Billion dollar budget deficit hit for making it right so they made a deal as part of the Postal Accountability and Enhancement Act (PAEA) of 2006.  The Post would be relieved from making future pension payments for the credits earned while in the Military and to make up for the cash shortfall they would be required to prefund 75 years’ worth of future health care costs in just 10 years of payments. No other agency or company in the world has such a mandated burden.

Before the economic downturn in late 2007, the Post was doing well and in exchange for some new autonomy for their completive product line (Shipping Services), a streamlined method to adjust rates for their Market Dominant products (Mailing Services) and future pension relief they reluctantly agreed.   Many industry veterans believed the bill that Congress jammed down their throats was short sighted and unfair to the Post and recognized that this was a disguised tax on the American public!

Any wonder why we don’t trust politicians?  They created this problem and they have the obligation to fix it fairly without any more accounting tricks and hidden taxes.  The Post has been backed into a corner, and I for one applaud them in their successful efforts.  They have dramatically reduced their workforce thru automation and logistical efficiency gains while their on-time delivery performance improves every quarter. 

Why does Congress and the press continually dump on the Post? If they were a private company, they would rank among the 50 largest in the world.  They are the largest deliverer of mail and parcels in the world, with more retail locations than Starbucks, McDonalds and Walmart combined.  The Post is one of the world’s most environmentally conscious entities, they are the #1 “most trusted Government agency” and the #3 “most trusted American organization”.  It is estimated that the overall Industry that supports them employs well over 6 Million people. 

The good news is that the Parcel delivery side of their business is thriving and driving records profits. With 151 million daily deliveries, they handle 40% of the world’s volume at the lowest per unit cost and deliver to the largest geographical area than any other Post.  So they are incredibly efficient, trusted, environmentally conscious and secure. Why do they continually get stymied by our Government and trashed by the major news media?

They got the public to overwhelmingly approve their plan to eliminate Saturday delivery for Letter mail, you would think Congress would stay out of their way, but no, they put an end to that 2 billion annual savings plan.  It boggles my mind.

So what does Issa want to do now to fix the post, force cluster boxes?  I wonder who else is going to profit from this?  Get real ISSA and make meaningful Postal Reform a reality.

Gordon S. Glazer, CMDSM, CMDSS, MDP, MDC

Gordon is the President of Mail Consulting Services for Shipware, LLC. He specializes in reducing shipping and mailing costs through modal optimization and other strategies. He welcomes your comments and can be reached at Gordon@shipware.com or 858.879.2020 x 108