Postal price increase proposed April 26 mostly at inflation
February 16, 2015
Bundle and pallet prices raised sharply
By Max Heath
The U.S. Postal Service surprised the mailing industry by filing a postage price increase at CPI as allowed under current law Jan. 15, to be effective April 26. The Urban CPI 12-month average is 1.9666, or about 2 percent. Price increases proposed to the Postal Regulatory Commission mostly cluster around that 2 percent number, with the average allowed by class.
But USPS is making major rework to incentives for Flats Sortation Sequencing machines, from which most newspapers are excluded, and making new pallet options for magazines. But pallet prices are being raised drastically. Most community newspapers are not palletized, but they will contend with lower pound prices mixed with higher bundle prices outside-county.
Standard Carrier-Route Mail used by shoppers and free newspapers will experience mostly lower-than-inflation increases.
The major surprise involves the fact that the U.S. Court of Appeals for the District of Columbia has not yet ruled on the appeals from the 2014 exigent increase of 4.3 percent, one by mailers seeking to limit it, and one by USPS wanting to make it permanent. It was widely thought that USPS needed to know that outcome in order to file a case. But this one was filed with two sets of prices, one showing inflation-only and another with inflation plus the exigency “baked in” to the base before adding inflation.
It is the latter one that is being considered for now, but a court decision could change all that, industry experts say. The price increase is said by USPS to raise $900 million in new revenue and make a $400 million “contribution” to profit.
Here are some highlights, though perhaps more will develop as this is being written on deadline:
In-County Prices for a typical 4-oz. newspaper sorted to carrier-route and entered at the office of delivery (DDU) would be 10.1 cents, High-Density (125-up in Walk/Sequence) 8.3 cents, and Saturation W/S, 6.8 cents per copy. Those are increases of 2.8 percent, 3.4 percent, and 4.2 percent, respectively. Percentages decline gradually as weight increases.
Outside-county pound prices are lower. That is because an adjustment in bundle prices and pallet prices. For those newspapers that enter at DDU in unsacked bundles, there is no container charge, but increased bundle prices could erase the savings on pound/piece prices.
Advertising pound prices are decreasing from 22 percent at zones 1-2 out to zone 9. They decrease 29 percent at DSCF and 28 percent at DDU. Non-advertising pound prices decrease 24 percent - 25 percent at all entry levels.
Outside-county piece prices are higher, but Machinable Flats just 1.5 percent - 2.2 percent higher, within the inflationary bands. Nonmachinable Flats would increase by about 2 percent - 11 percent, with Barcoded more than Nonbarcoded, strangely. But to be clear, the Barcoded Nonmachinable prices are still in place. Firm bundle piece price is 20.2 cents, up 1.5 percent.
Bundle prices are increasing as much as 124 percent, as in the case of 3-digit or SCF bundles in an ADC or SCF container. That’s from 20.7 cents to 46.5 cents a bundle in ADC trays/sacks, or from 14.3 cents to 32 cents in SCF tray/sacks. One worst-case scenario is 161 percent, an ADC bundle in MADC container. But copies sorted the same as the tray sort should not be in bundles. Consult with your software vendor. That is one advantage of Flats Tray use.
Firm bundles outside the county increase from 8.6 cents to 10.7 cents in 5-digit containers, or 24 percent; from 15.4 cents to 22 cents in SCF/3-digit trays/sacks; 43 percent; from 16.7 cents to 27.5 cents, or 65 percent, in ADC sacks/trays.
(You only pay this price for one piece in the bundle, so the effective increase is different based on the number of total pieces. The same is true of all bundle prices, making it difficult to compute the effect on any one newspaper.)
Remember, there are no bundle or container charges for in-county mail, nor mixed in-county/outside-county. Another bonus for newspapers is that the tray/sack charges are unchanged from 2014 prices.
Pallet prices are increasing sharply. Those most used by Periodical newspapers are large-volume Saturation pallets by Requester newspapers in suburban areas. If entered at DDU in-county, there is no cost. But if entered at DDU outside the county price would increase from $1.79 to $3.12. A 70 percent increase is not a huge amount of money for a full pallet.
DSCF pallets (entered at the SCF) of carrier-routed newspapers would cost 60 percent more under this proposal, with the price going from $12.45 to $19.97. I won’t try to share other pallet prices not commonly used by NNA members, but e-mail me at the address below on any questions about these or other parts of the price proposals.
STANDARD CARRIER ROUTE PRICES
ARE BELOW OR CLOSE TO INFLATION
There is less complexity of change in Standard Mail prices paid by newspaper shoppers and some free newspapers, as the accompanying chart will show.
DDU/Saturation prices would increase by 0.64 percent up to 3.3 oz., only 1 percent at 4 ounces and trending lower up to a pound.
(Note: There is controversy between the National Newspaper Association and USPS over charging EDDM Commercial Prices for Saturation copies that are unaddressed or have Simplified Address. We believe that our members with existing shoppers should stay at line F19 of 15.6 cents versus higher EDDM of 16.1 cents. As we had feared, the differential of one-tenth cent last year has increased to one-half cent this year in proposal.)
DDU/High-Density Plus prices for 300-up on a route in walk-sequence order would go up by 2.2 percent up to 3.3. oz., by only 0.41 percent at 4 ounces, and then trending up slightly to 0.65 percent.
DDU/High-Density prices for 125-299 pieces on a route walk-sequenced would increase by 2.65 percent up to 3.3 oz. then trends to lower percentages after 5 oz.
DDU/Basic prices for 10-124 pieces on a route are going up almost nothing, with the same price up to 3.3 oz. and increases in the tenths of 1 percent as weights increase. This reverses recent trends, which had the Basic price getting the largest increases. The change is probably because of the creation of 5-digit and 3-digit carrier route pallet prices at DDU and SCF, just as in Periodicals, to get catalogs to drop closer to the entry point more efficiently.
Detached Address Label charge for those that use them would increase from 34 cents to 36 cents per piece. © Max Heath 2015
Max Heath, NNA postal chair, is a postal consultant for Athlon Media Group, publisher of Athlon Sports magazine, Parade weekly, American Profile semiweekly, Relish, and Spry monthly newspaper supplements, and also for Landmark Community Newspapers LLC. E-mail email@example.com.