Big Changes Could Be Looming for Postal Customers

Always an area for speculation and consternation, the USPS is keeping us guessing on what will be included in their 10-year plan to Congress on long-time survivability. In the meantime, businesses should be prepared for some potential short-terms changes, including the possibility of the United States pulling out of the Universal Posting Union.

Helping us all understand what we are facing at the moment, Chris Lien and Anita Pursely shared their insights in this Industry Corner Podcast.

Rate changes ahead for 2020 & 2021

Pursley, senior manager at BBC Software and a recognized postal rates expert, attended the Postal Operation Technology Committee meeting in Minneapolis this spring, and relates what she learned from Steve Phelps, USPS’ acting VP of pricing and costing. She came away with a handful of insights:

1. Marketing mail flats are going up by around 4%

While the 10-year plan may say differently, Pursley says it’s a moot point for 2020.

“It’s understood that the 10-year rate review will not be settled in time for the January increase, so people can start planning now for 2020.”

She says the USPS is planning to file with the PRC in October using the August Consumer Price Index – Urban (or CPI-U) at 1.98%. Marketing mail flats, she reminds us, are directed by the PRC to get 2% above the CPI-U, so we are looking at a 4% bump in those postal rates.

2. Weight break on marketing mail flats under evaluation

The weight break between the piece rate and the piece/pound rate on marketing mail flats could be changing, and that could dramatically change plans for catalogers. Pursley reminds us that a few years ago the USPS changed the breakpoint from 3.3 ounces to 4 ounces.

“Catalogers were ecstatic because they could add more pages without having that increase in postage,” she explains. The mailing industry is on edge now, as the board of governors will meet in September to evaluate if 4 ounces is still the right number, or should it be lowered to 3.5, 3 or even as low as 2 ounces, according to Phelps.

Again, too soon to tell if or when this will change; we’ll keep an eye on it.

It’s also possible that the USPS will be combining several types of mail into one category, a move that will possibly roll out in stages (listen to the podcast around 9 minutes in for details on this). In fact, if you are a cataloger or do a large volume of flats mail, the entire podcast is definitely worth a listen. Pursley talks about possible changes in minimum and maximum mail prep numbers (around 10:10 in the podcast); potential changes to carrier route palettes (11:20), and full-service requirements for best rates (13:00).

Will the US leave the Universal Postal Union?

The second part of the podcast deals with the possibility of the United States withdrawing from the Universal Postal Union, the global organization that sets rules and rates for international mail delivery. Last fall President Trump gave notice of the US’s intention to withdraw in October of this year, due to the economic distortion of the current terminal dues. The UPU is holding a congress in September to discuss terminal dues; depending on the outcome the US may go ahead with its plans to withdraw, so mailers need to be prepared for what could be, in Pursley’s words, a “crazy situation.”

We’ll continue to monitor all of these fluid situations. In the meantime, talk to your mail provider to help strategize your best course of action in these fluid situations.