Standard Mail Carrier-Route prices drop in second filing
April 2, 2015
By Max Heath
PRC remands USPS case a second time
Newspaper mailers still face uncertainty with 2015 postal rates, as the Postal Regulatory Commission has now twice kicked back the U.S. Postal Service request for new rates to go into effect April 26. Because the Postal Service has to provide 45 days’ notice before new rates occur, it would have needed final rates by March 12. But on March 18, the PRC indicated it still wasn’t happy with the proposal for either Periodicals or Standard Mail.
So the following is useful as a guide for the rates that may be ahead, amidst the PRC’s criticisms of USPS data. But final rates will not be known until the PRC is happy, unless USPS decides to gamble on implementing new prices without the PRC blessing. That has happened in postal history, but usually ends up in the courts.
Here is what has gone on so far.
The Postal Service re-filed parts of its 2015 price case after certain sections of it were remanded (rejected and sent back for correction) by the PRC. There were two notable changes affecting newspapers.
Most notable was the changing of Standard Mail Carrier Route Flats prices from slight increases (1-2 percent range) in the original filing to decreases (1-3 percent range, with one price, High-Density Plus minimum price, down 11.4 percent) in the second filing. This price is for 300 or more walk-sequences pieces per route. The changes occurred for several reasons, including PRC’s order to make presort discounts equal between for-profit and nonprofit rates.
If these numbers stick, newspapers with shoppers would enjoy lower costs. The changes are to Part F of the 3602-R.
Periodicals rates suffer from similar uncertainty, which is complicated by the fact that in recalculating the rates, USPS wound up with a smaller increase than the law would have allowed. Because Periodicals are thought to be “under water” or failing to cover costs, USPS is required to explain any rate that does not hit the price cap ceiling. But to date, it had not.
In the second filing, there was one change in the Periodicals pricing from that originally proposed. Advertising pound prices (Part B, 3541) were decreased less than in the original proposal, but nothing else. Bundle charges would still be increasing rather sharply.
The complexity of this rate filing centers primarily on new incentives being granted for Flats Sequencing System mail, even though the machines are in high-demographic, metro areas that include only 30 percent of the flats volume in the country. (The term “Flats” includes newspapers, magazines and large envelopes). Newspapers have been mostly exempted from running on the machines because they don’t run well.
But because USPS has not—to date—adequately explained to the PRC what the old prices would have been for the mail that will get the new discounts, the PRC says it cannot calculate how much the increase would be for the new FSS mail. The dispute between the two bodies, however, is primarily based on incomplete calculations in the USPS filing and not in principled disagreements about rate policy. So once the commission is satisfied with the math, the increases are likely to be approved.
PRICE CHANGES LIKELY
DELAYED BEYOND APRIL 26
As the National Newspaper Association’s Leadership Summit was being held in the District of Columbia area March 18-19, the same parts of the case filing were remanded again by the PRC. The postal response will be filed and PRC approval possible by the time you are reading this in early April. Increases for Periodicals and Standard Mail are now likely to slip to early May.
It is also useful to remember that yet another uncertainty looms for postal rates. The U.S. Court of Appeals for the District of Columbia is still considering the appeal of NNA and others of last year’s exigency increase. The current state of the law is that USPS has to stop charging for the exigency in August. If the USPS wins the court case, the exigency rate base could go on forever—or it will seem like forever. If NNA and other mailers win, the exigency charge will have to stop when USPS has recovered the revenue it claimed it lost during the recession. So—even with the uncertainty from the current year’s case unresolved—the court decision could once again knock future rates into a tailspin of uncertainties.
Watch your e-mail in-box for a news release or check www.nnaweb.org for updates later this month.
Other postal news
PERIODICALS SERVICE STANDARD
CHANGE TO 3-4 DAYS WITHIN SCF
The Postal Service not only ended First-Class overnight service within the SCF (Sectional Center Facility) of entry, but the Periodicals service standard within the SCF was changed from 2-4 days to 3-4 days. This obscure shift was in a 2011 Federal Register filing, but USPS chose not to remind mailers of either change, effective January 2015 in conjunction with more planned plant closures. They refused PRC advice to re-justify the 2015 closings and revisit service standards.
The only good news so far is that the massive operational changes put in place for First-Class mail have so disrupted the system that any plant closures have been postponed to April or beyond.
ePUBWATCH NO LONGER OPERATIONAL
Newspapers using the electronic Publication watch, or “ePubWatch,” may have noticed that the service is no longer offered. Another system with the acronym “ADVANCE” used by Standard Mail customers was also discontinued November 2014.
Although ending the two tracking programs was blamed on the USPS cyber intrusion that same month, the truth, at least for Periodicals mailers, may lie elsewhere. (ePubWatch was championed by a task force of mailers, including NNA, more than a decade ago.)
Reductions in USPS staffing created two problems. It lacked support within USPS headquarters. Staff reductions in post offices have resulted in fewer “Delivery Unit” supervisors, or small-office postmasters, checking the system in their office computers to see whether they actually had complaints on file. Publishers reported fewer answers to their watches.
Hardcopy publication watches, PS Form 3721, are no longer available, either. But they were always a waste of time as the answer (if any) was long in coming and just verified what the publisher already knew. The paper was indeed late. No diagnostic help was received.
FULL-SERVICE IMb BEST HOPE
FOR NEWSPAPER TRACKING
Periodicals mailers are being pointed to Full-Service Intelligent Mail barcoding as the panacea for delivery problems. Although the verdict is still out, newspapers should work with their presort vendor to get on board if they can to gain “visibility” within the USPS processing network.
Although newspapers may not get individual piece tracking based on machinability, barcodes on bundles and flats trays are either in use or in the works to help track containers in processing plants and delivery post offices. Because 99 percent of mail in post offices is delivered the next day, this is a good indicator.
As demonstrated last month in this column, mailers can learn to track mail through the Business Customer Gateway of PostalOne! A sample involving Publishers’ Auxiliary, which is already using eDoc and Full-Service IMb, was provided. NNA will offer periodic webinars for members ready for “onboarding” to eDoc and Full-Service.
Several members of the NNA Postal Committee and NNA Chief Executive Officer Tonda Rush met with Steve Dearing and Robert Cintron of USPS “Enterprise Analytics” during the March NNA Leadership Summit to discuss ways in which NNA could improve newspaper visibility in the mail.
Publishers expressed their need for better delivery with service declining further in the wake of processing plant consolidations. And newspaper characteristics were better explained to these key staffers to involve both operations and electronic improvements to facilitate newspaper movement and tracking. Interlink Software President Brad Hill, frequent presenter of NNA webinars on use of electronic documentation and Full-Service, is the optimistic expert working to increase newspaper visibility via the Mailers Technical Advisory Committee.
FLATS TRAY DISCOUNT NOT IN WORKS
NNA pressed the Postal Service in the current price filing about plans for offering a discount for use of Flats Trays (white tubs) by newspapers and other Periodicals. Unfortunately, USPS confirmed it has no plans for designing different charges to incent tub use, and has not studied the question.
In its answer to Rush’s questions, it claimed only 5.5 percent of Periodicals mail was entered in Flats Trays. That may be, but the percentage is likely driven by the fact that magazines still use sacks almost exclusively for the “tail of the mail” that can’t be placed on pallets. And the total volume of magazines far outweighs that of newspapers.
NNA believes that up to half of newspapers have converted to flats tray use. But we need, as an industry, to further expand tub use to get the attention of USPS. Newspapers not using tubs are urged to convert, or urge their printer to do so. NNA continues to remind postal pricing experts that a pricing incentive recognizing lower costs would help hasten a worthwhile abandonment of sacks. © Max Heath 2015
Max Heath, NNA postal chair, is a postal consultant for Athlon Media Group, publisher of Athlon Sports magazine, Parade, American Profile, Relish and Spry newspaper supplements, and also for Landmark Community Newspapers LLC. Email firstname.lastname@example.org.