By Mark J. Rheaume
What Lies Ahead
for the Mail Industry? The USPS rate changes that just took effect are a sign of things to come — and instead of feeling frustrated, mailers should feel optimistic.
he past year was an exciting one for the mailing industry. Although I do not have a crystal ball, it is always exciting to share some thoughts about what could happen in our industry throughout 2019. We all know that new USPS postage rates went into effect on January 27 (see page 28 of this issue for a recap if you missed the analysis in Mailing Systems Technology’s January e-newsletter). These new rates are interesting and represent an opportunity to the industry. It is all too easy to groan about the record price increase of a First-Class stamp and lose focus on the opportunities we should all see; the biggest opportunity being that the price difference between ounce breaks is changing from $0.21 to $0.15. This means that every First-Class full rate or full metered rate mail piece will be less expensive after January 27! This is also true for presorted flats. The prices at every ounce break, starting at two ounces, are lower than those in place before the price change. This is significant for our industry and an incentive to rethink protocols and adjust processes and practices. Traditionally, flats have not been considered economical or
JANUARY-FEBRUARY 2019 | MailingSystemsTechnology.com
practical by the industry. These changes and realities alter that significantly. This new pricing should be viewed as an invitation to save money by adding content to these mail pieces and not creating multiple packages, as has traditionally been done. Actual reduction of rates is rare, and we need to seize the benefits of this change for our organizations. The industry has done similar things for some time for letter-size pieces (remember the “second ounce free” mantra?) and, now, flats have started to reward this same behavior. While it is not free, additional ounces are cheaper than last year, and those savings should be measured and reported to our organizations. This will be effective for flats up to 13 ounces and after that, there are some changes we all should be aware of. NEW YEAR, NEW CHANGES The USPS is making a big change to First-Class Package Services by adding zone-based pricing. Currently, the rate is determined solely by the package weight. As of January 27, the zone becomes a factor in these rate calculations. Priority Mail offers many benefits over competitors’ services, which include: flat-rate price
options; ample selection of free packaging; no fees for Saturday delivery, fuel surcharge, or residential surcharges; endto-end tracking and more delivery times between one and three days than any one carrier. In 2019, Priority Mail Commercial Base and Commercial Plus pricing will be identical. The big change within Priority Mail rates that shippers need to take notice of is the implementation of DIM weight pricing for Priority Mail services, although this change will not be effective until June 23 of this year. Simply stated, DIM weight is determined by volume and the space it occupies during transport. The USPS will begin applying this pricing to large parcels with low weights. The calculation is simple: Multiply the length, width, and height. If the result exceeds 1,728 cubic inches, divide the total by 166 and round up to the nearest full pound. The postage cost will default to the greater of the actual weight in pounds or the DIM weight. DIM rating is not new, but two things are being changed: the divisor used in its calculation and the applicable zones where DIM applies. The new calculations will use 166 as the divisor (it was 194 prior to this
Mailing Systems Technology Jan/Feb 2019