Q & A: 2016 price increases, service deterioration

September 8, 2015

By Max Heath
Postal Tips

Q

—How much will postage rates increase in 2016?

A

—This is another murky time for projections. But as of this writing, it appears that prices will actually decline sometime around April 2016. And with CPI running at just 0.576 percent through July, as tracked by the Postal Regulatory Commission on its website, filing an inflationary price increase under current law hardly seems worth it. 

I am advising newspapers to budget “flat” to 2015, which means the same costs experienced from July through December would be in effect for the first five months of 2016. That would mean an increase of around 2 percent, then flat for the same volume of pieces for the last seven months of the year.

The 2015 increase was 1.9 percent average for Periodicals, though we’ve seen some papers experiencing increases closer to 5 percent to 8 percent if they had a lot of small bundles or used pallets and lots of outside-county copies. 

Pound prices declined outside county to help make up for the large increase in bundle and pallet costs. Piece prices were mostly the same, as were tray/sack prices. In-county increases were close to 2 percent.

The reason for the possible decline is a ruling by the PRC in the wake of a Court of Appeals ruling that the Postal Service could only collect its 4.3 percent exigency increase until an amount attributable to losses from the Great Recession were recovered. That amount will be reached in about two years, around April 2016, at which times the extra 4.3 percent hike would end. It was originally added in 2014 to the 1.6 percent inflationary amount allowed by the 2006 postal reform bill.

NNA argued for an end to the collection as part of a mailer coalition. USPS argued to keep it “forever,” and lost, thankfully. 

The final word on what PRC will permit is not yet in, though. USPS continues to resist a price reduction. It owes PRC a detailed plan on how it will roll back the exigency money. Until the plan is submitted and approved, we could still see changes in outlook.

It is worth reminding members here that the annual inflation-based price cap is legally in place through 2017. At that point, the PRC begins a review over whether the price cap has worked. Whether it has or not depends upon one’s viewpoint. Certainly it has not permitted USPS to recover revenues when its labor contracts have risen beyond inflation—as they have done most years since 2006—and that has prompted reductions in service. NNA expects a watershed debate over the future of USPS. We are already involved in shaping that future through postal reform legislation.

 

Q

—What can I do about deteriorating service?

 

 

 

A

—Delays caused by nationwide service standard changes Jan. 1 with Sectional Center Facility delivery changed from one to two days to two to three days for Periodicals along with First Class changes from one day to two. Thousands of postal processing personnel were moved from one tour, or shift, to another, meaning those familiar with newspaper mail may no longer be the ones handling it.

Hub sortation and/or entry is the first thing to consider. You must check with your postmaster or Hub postmaster to see if mail is being handled properly. NNA drove the policy of cross-docking “Direct” containers within the service territory of former SCFs after mail processing was stopped there and moved “upstream” to a more distant, large-city plants. Hubs are now in place in many cities. USPS has promised NNA that more will be added if more plants are consolidated.

This means that Flats Trays (much preferred over sacks) of 5-digit, Carrier-Route, or M5D trays merging both types of bundles, entered at your post office are to be kept at the former SCF (now Hub) and switched to other post offices within that territory exactly like it was handled before the end of mail processing there, provided transportation exists to efficiently move that mail. (Note that copies sorted to 3-digit or SCF for the old plant—now Hub—will still get sent to the distant site. Newspapers should take steps to maximize copies in Direct trays within the Hub coverage area.)

Second, if you happen to enter mail directly at the Hub office, you can once again claim the SCF discount just as you did before January 2015 at any of the 187 Hubs officially designated for that purpose. To access this list, go to www.nnaweb.org where it is available to NNA members. Ensure your software is taking this valuable discount.

Third, newspapers must ensure that they are using the proper mail sortation tables provided by PAVE-certified software (under its Presort Accuracy Validation and Evaluation program) with the latest updates supplied by your vendor. Labeling lists are in constant state of flux. Then follow the other steps given in last month’s column to ensure your staff or printer/mailer is doing so correctly.

Flats tray (white tub) use is an essential step as outlined then and now. The new USPS manager of processing operations, Isaac Cronkhite, told Brad Hill, Interlink Software president and a rep with me on the quarterly Mailers Technical Advisory Committee, exactly that on Aug. 11 in Washington.

Tracking of Periodicals via the epubwatch website of USPS is no longer available since a cyber-intrusion in 2014. I do not recommend the use of PS Form 3721, Publication Watch, as it is not satisfactory. The only available tracking is via Intelligent Mail Barcode. 

That is made difficult by the fact that newspapers are not often placed on machines to scan the IMbs. But the ability to scan bundles is a month or so away from pilot testing so that may suffice for most newspapers. When bundles are scanned at plant or delivery office, delivery is usually just one to two days away. Newspapers registered to use eDoc will soon be able to see service reports with bundle scans included, but we do not yet know when the rollout date for reports on the user “Dashboards” will be available.

 

Q

—How can I get service to nearby towns whose service has been shifted to a totally different SCF, or Hub, than the one we were both in?

 

A

—That’s a tough one, and I see it happen all too often. A town on the far end of a county has a 3-digit ZIP whose territory is now delivered by a far-distant plant. For instance, White Top, VA, in 242 was moved from Roanoke to Knoxville, TN, SCF. Newspapers that had moved 108 miles from Independence, VA, to Roanoke, then 136 miles back to White Top, now add 259 miles to Knoxville and 158 back to White Top, plus another handling. Delivery has seriously deteriorated. 

The only answer, when it is not feasible to drive them yourself (in this case around a mountain), it is to find someone who has reason to drive from Independence to White Top, such as a delivery truck or commuter. Both are hard to find in disconnected parts of rural America. Although national magazines simply redirect their drop-ship points from Roanoke to Knoxville for 242 copies, newspapers lack that flexibility. © Max Heath 2015

 

MAX HEATH, NNA postal chair, is a postal consultant for Athlon Media Group, publisher of Parade, American Profile, Relish and Spry newspaper supplements, and also for Landmark Community Newspapers LLC. E-mail maxheath@lcni.com.

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