Is the USPS About to Penalize Efficient Mailers?

“Move more of your mailings to High Density Flats; you’ll save money and so will we,” said the Post Office.

“Done,” said many of us in the magazine and catalog industry, taking advantage of better rates for our customers, and some participatory advantage for us as well. As a result, High Density Flats volume has grown by 45% over the past two years.

Win, win, right? 

Nope, says D. Eadward Tree, watchdog of all things postal in our industry. As he writes in his blog, Dead Tree Editions, “Postal officials can’t explain — and don’t seem to be trying very hard to understand — why the Postal Service’s costs of handling most types of Standard flat mail have skyrocketed in the past year. That trend also threatens to cause higher rate increases even for efficient mailers.”

To put this into context, the USPS has been raising rates for mail that doesn’t fit into the high-efficiency column, what Tree calls Non-Carrier-Route Flats. Costs for handling this type of mail is rising faster than revenue; it’s a big column of red ink on the USPS’ books … and there’s no explanation forthcoming on why this happening. 

As Tree notes, “Better incentives have encouraged more comailing, a process that sorts a variety of mail pieces — mostly catalogs and magazines — into a single mailstream to take advantage of postal discounts. The work is typically done by printers, which are rewarded with a share of their customers’ resulting postal savings.”

The industry, in other words, is doing what they’ve been incentivized to do. And that should be great news for the USPS, because this is a high-profit category for them. 

But the USPS is focusing on a “phantom problem” as Tree sees it, namely “the reduced efficiency of Non-Carrier-Route Flats. The ‘solution’ they are considering, they revealed recently, is to combine Non-Carrier-Route Flats, Carrier-Route Flats, and High Density Flats into a single category known as Non-Saturation Flats.”

“In a way, the USPS is suggesting that if it lashes two water-tight boats to a sinking vessel it will save the sinking ship,” as Tree quoted from the Mailers Hub newsletter.

Um, I’m no Warren Buffet but this doesn’t make any sense from any solid business perspective. But if I squint tightly and look at this from the POV of the USPS, I see the twisted logic that Tree points out.

“What really galls the postal experts I’ve spoken with recently is that the Non-Saturation Flats proposal looks like an attempt to paper over some very real problems – what one postal expert called ‘re-arranging the chairs on the Titanic deck’ — instead of understanding and addressing them.”

At the heart of the problem, Tree believes, is the wildly unsuccessful Flats Sequencing System, which continues to bleed red ink. They are desperate to justify the huge investment they made in this technology; by lumping this mess in with better-performing categories they just might be able to achieve that.

We see you, USPSP. Listen, everybody makes mistakes. Fess up, fix it and move on. Don’t penalize the industry for playing by your rules.