The United States Postal Service filed notice with the Postal Regulatory Commission (PRC) of price changes for Mailing Services products scheduled to take effect in January 2017.
Standard Mail is being rebranded as USPS Marketing Mail to better align the product name with the use of this mail class. Proposed changes in Marketing Mail include removing the Flats Sequencing System (FSS) pricing, which was of concern to mailers. This change will ensure that mailers pay for flats based on their volume density instead of the equipment flats are processed on. Other changes include increasing the piece pound breakpoint from 3.3 to 4.0 ounces for Marketing Mail Flats and Parcel shaped pieces to encourage mailers to include more content, which will lead to more sales for mailers and support volume growth.
So let’s look at each one of these new proposed changes:
Flats Sequencing System (FSS) pricing
The USPS is proposing to remove the Flats Sequencing Sorter (FSS) pricing elements. These prices were introduced by the USPS in 2015 as a means of encouraging mailers to prepare mail for induction and processing on the FSS equipment. However, since these FSS prices were developed by blending Carrier Route and 5-digit/3-digit prices, some mailers with heavy Carrier Route volumes experienced a significant price increase. This resulted in a drop in FSS volume rather than the desired increase. The USPS has now decided to remove the FSS surcharges in hopes of bringing back that volume to those areas.
There have been many opinions written about huge savings for mailers based on this FSS discount. But let’s look at the reality of this situation. The USPS has 47 FSS sites nationwide. If you are mailing to those specific sites then, yes, rates will decrease for those pallets. If you never had any mail destined for those sites your mailing will not be affected. This rate decrease is dependent on the destination of your mail product.
This discount was driven by the industry. Mailers had been avoiding additional postage by shifting that mail volume to other markets (non-FSS sites) thus dodging the higher FSS charges. If your list processing company had been doing that you will not see savings due to the FSS discount.
3.3 to 4.0 Ounce Weight Break for Flats
The maximum weight of Standard Mail flats that pay piece rates only will increase from 3.3 ounces to 4.0 ounces. The purpose of this change is to add value to the mail pieces by allowing the improvement of the quality of their mail pieces (i.e. increasing the quality of their paper or increasing the page count) without incurring additional per piece pound charges. Currently, the mailer pays a per piece rate up to 3.3 ounces. If the piece weighs more than 3.3 ounces then additional postage is calculated based on a pro-rated weight scale. This now will increase to 4.0 ounces before additional postage is needed.
Clearing up the rate increases
The below table, published by the USPS; at first glance seems to show minimal increases, but this all depends on how each client is mailing.
As we dig deeper into the rate case proposal for Standard mail, we find some interesting numbers. It shows only a 0.895% increase in the prior table, but as you see below it ultimately depends on where your mail is falling in the postage rates and categories. Some of the decreases shown below reflect the removal of the FSS rates along with the increase per piece weight to 4.0 ounces.
Periodicals will see a slight increase, as shown below.
The above illustrations are just the highlights of the new price adjustments. From what we’ve read and understand, this proposal does not seem to be getting a lot of resistance from the Postal Regulatory Commission. So, in our opinion, we believe most if not all of the proposal will be approved and clients should prepare for an increase scheduled for January 22nd, 2017.
The USPS filing also includes the proposed 2017 promotional offerings:
- Emerging and Advanced Technology: March – August 2017
- Direct Mail Starter (New): May – July 2017. This offering will give a temporary postage discount on mail pieces that contain print-mobile technology that, when scanned, leads the recipient to a mobile-optimized website.
- Mobile Shopping: August – December 2017
- Tactile, Sensory & Interactive Mail Piece Engagement: February – July 2017
- Earned Value Reply Mail: January – June 2017
- Personalized Color Trans Promo: July – December 2017
Your customer service staff and mailing department at Freeport Press are always happy to answer any questions regarding changes in rates or service.