Shape-Based Rate Change Lance Whitson Vertical Account Manager Colleges and Universities NACUMS Sally-Ann Moss National Document Systems Specialist /Addressing

Shape-Based Rate Change Lance Whitson

Vertical Account ManagerColleges and Universities

NACUMS

Sally-Ann MossNational Document Systems

Specialist /Addressing

Neopost Private and Confidential – Created by Sally-Ann Moss

New Thinking =

New Savings Mailpiece design will become even

more critical with the 2007 postage rate increases


The USPS has unveiled proposed new pricing incentives that would reshape the future of mail− Current structure does not distinguish letters from flats

and parcels 1oz Letter and 1oz Flat are the same pricing structure It costs the Postal Service more to process flats than letters due to

size

− New pricing creates an adjustable rate system by giving mailers the opportunity to obtain lower rates by changing the shape of the piece

Forcing mailers to use letter rate− Easier for the USPS to sort and manage letters− Postal Service is less impacted by weight - size has a greater impact− They have redesigned 2nd oz (reduced cost)− Eliminated the surcharge for 1 oz flats


5 KEY AREAS AFFECTED

FIRST CLASS MAIL PARCEL/PRIORITY MAIL ADDRESS CORRECTION CONFIRM SERVICES STANDARD MAIL

FIRST CLASS MAIL OVERVIEW


6 1/8"Max.

11 1/2" Max

3 1/2"

5"

Min Size

Letters no more than ¼” thick

Letter & Flat Measurements

Flats 12” x 15” no more than ¾” thick


First Class Mail Today Shape – based pricing schedules

− Letters− Flats− Parcels

2-ounce letter

63¢

2–ounce flat

63¢2–ounce Parcel

63¢


First Class Mail Next May Shape – based pricing schedules

− Letters− Flats− Parcels

2-ounce letter

63¢ 2–ounce flat

63¢

2–ounce Parcel

63¢62¢82¢ $1.20

•De-emphasize weight

58¢ PRC 97¢ PRC $ 1.30 PRC


First Class Mail Impact Single Piece Letters

Current Proposed Diff1oz - .39c .41c 2c 2oz - .63c .58c -5c 2nd oz .24c .17c -7c

Automation LettersCurrent Proposed Diff1oz - 29.3c 31.2c 1.9c2oz - 53c 43.7c -9.3c

Reduction for Single Piece 2nd oz from 24c to 17c Reduction for Automation 2nd oz from 23.7c to 12.5c Letters that exceed aspect ratio or are nonmachinable will be rated as flats regardless of

weight Aspect ratio = L/H must fall within a 1.3 and 2.5 ratio

− 6x9 1/2 envelope = 1.5 = OK− 4x10 envelope = 2.5 = OK− 6x6 envelope = 1 = Not OK Will be charged 41 + 17 = 58c


Automated Solution Current RatesHow much does your

item weigh?(If over 2 ounces)

May 2007 RatesClassify your mail by weight, size, and thickness

Does the item weigh less than

3½ ounces?

Is the item

smaller than

6 1/8” x 11 ½”

Is the item less than ¼”

thick?

Is the item smaller than 12” x 15”?

Is the item less than ¾”

thick?

First-Class Letter, Flat or

Parcel

Parcel

NoYesYes

NoNoNo

NoNo

NoNo

NoNo

NoNoDoes the item

weigh less than

13 ounces?YesYes YesYes

YesYes

YesYes

YesYes

FlatLetter First-Class Letter, Flat or

Parcel

Shape-Based Pricing Compliant

System


Current Situation Proposed Opportunity

Flat Envelopes Per Month 5,000

Weight Rate % Cost

Weight Rate % Cost 1oz 0.41 80% 1,640$

1oz 0.80 80% 3,200$ 2oz 0.58 15% 435$

2oz 0.97 15% 728$ 3oz 0.75 5% 188$

3oz 1.14 5% 285$

Proposed Monthly Processing Cost 2,263$

Current Processing Cost Per Month 4,213$ Proposed Annual Processing Cost 27,150$

Current Annual Cost 50,550$ Proposed Annual Savings 23,400$

Proposed Monthly Savings 1,950$

2007 RATE CASE FLATS VS LETTERS

Using Full Rate Postage2007 Proposed Rates and ChangesThis example takes current flat 1 & 2oz envelopes and converts them to letters.When converting flats to letters, use 6 x 9.5 envelopes.3oz flats will continue to use flat envelopesFlat envelopes = 9x12 & 10x13

By converting flats to letter size

a mailer can save $1.960


New Category of Mail

Not Flat Machinable Category−Mail that is too thick or rigid to

run on the USPS Flat sorters−Mailpiece smaller than 5x6,

thicker than a ¼”−Mailpieces longer than 15”−Mailpieces thicker than ¾”

ADDRESS CORRECTION/CONFIRM


ADDRESS CORRECTION SERVICES

Postmaster General has stated by 2010 UAA Mail will have to be reduced by 50%

2 Billion Dollar cost to the USPS Annually USPS encouraging mailers to use ACS and utilize

4 state barcode or 1 code Future use for certified mail

−Discount for using 1 code b/c and electronic processing

First 2 notices for 1CL free additional .05 auto letters First 2 notices for STD .02 additional .15 Electronic process w/o 4 state b/c reduced from .21 to .06

One code


UAA Mail


4 State Barcode

2 State Planet code

2 State Postnet Barcode

4 State Barcode


ABC Company123 Main StreetBay Village OH 44140

Address Service Requested

#BWBJDCK******************38188#901 681 4676#INTELLIGENT MAIL AND ADDRESS QUALITY6060 PRIMACY PKWY STE 201MEMPHIS TN 38188-0001

ABC Company

123 Main Street

Bay Village OH 44140

INTELLIGENT MAIL AND ADDRESS QUALITY

4 State Barcode accomplishes all 6060 PRIMACY STE 201

MEMPHIS TN 38188-0001

Ancillary Endorsement

Planet Code

ACS

Post Net Barcode


ADDRESS CORRECTION

Today, mailers assign a Zip+4 code to addresses that may be deliverable within a known address range

New regs will require “DPV” Delivery Point Validation

After

23033 Roberts Run

Bay Village OH 44140-2976

Before

23033 Roberts Running

Bay Village Ohio 44140

DPV

Before

23033 Roberts Running

Bay Village Ohio 44140

After

23034 Roberts Run

Bay Village OH 44140-2976

CASS


LACS Link will also be a requirement in August. This allows a customer to convert Rural Routes to real deliverable addresses. As an example out in the plains addresses that consist of RR1 which doesn’t exactly state where the building is. For the 911 conversion these addresses need updating so emergency vehicles can easily find the building

STANDARD MAIL


STANDARD MAIL Shape based pricing like 1CL Letter pricing based on barcoding and

machinability Flats pricing based same as Letters

except for ‘NFM’ or Not Flat Machinable Machinable and Non ParcelsAuto Flats =

processed on ASFM100 w/bar code Non Auto Flats = processed on ASFM100

w/o barcode NFM = cannot be processed on ASFM100

Will end up as a Parcel


What you can do

Don’t Panic By taking the following steps you can greatly

minimize the impact of Shape Based Pricing− 6 1/8th x 11 ½” No more than ¼” thick− If you have multiple pages into an envelope

consider duplex printing− Ensure that you purchase a decision making

weigh platform that can detect thickness, weight and dimensions

− Change the font size of the print− Re examine forms for unnecessary print


Mailing System Solutions

Full line of mailing systems solutions:− HP Digital Inkjet Printing technology− SBP Compliant dynamic weighing

platforms− Modular construction (ability to add at

any time)− Touch screen control panels− Industry leading mixed mail processing

speeds− 4 Point detection system


Folding and Inserting Solutions Unfolded pages inserted into a flat will cost

more. To save money, you should fold your inserts.− Minimize the number of unfolded items in your

mail. Fold them and put them into a #10 or 6” x 9 ½”

− Grouping documents into one envelope to cut postage costs. One 2oz flat at .97 is still more expensive than two mail pieces at .41

− Switch from single sided printing to double sided printing.

− Maximize each oz. Add a marketing piece or two. If you have room to spare in an envelope, use it


Software Solutions

Forms creation software helps you gain control over the creation, customization and distribution of business critical documents. This will save time, labor and costs by providing:− Document grouping capability− OMR printing for OMR capable inserters to

scan and collate priot to folding− Document e-mailing, faxing and archiving− Address correction and validation− Presort and automation


Addressing Undeliverable addresses mean unpaid

invoices, lost sales and poor customer service. It is more important than ever to ensure that:− The USPS can deliver your mail to the

proper address− Your postage will not be wasted on a bad

address Address validation software will allow

you to take advantage of automation rates which will reduce your costs


SUMMARY Anticipate major change modifications in size, weight and shape for all

classes of mail− Letters− Flats− Parcels

Very complex for the casual mailer Need more details from USPS Will take full 10 months at PRC Implemenation lead time 60 days Impact is mailer specific Will be difficult for USPS to administer

− Thousands of Window people need to be trained− Customers will need to be trained

Proposal will require the Post Office employee to know whether the piece is a letter, a flat or a package based on size

Will be difficult for customers to manage Will be very costly to the USPS in equipment, personnel and training


Timeline

2006 May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Governors Decision(March/April)

Implementation(May/June)

PRC Recommendation(Early March)

Litigation(May through March 2007)

Filing Date(May 3, 2006)

10 Months

1 Year

2007


For more information log onto www.usps.com/ratecase

Additional questions

Lance [email protected] Cell

Sally-Ann [email protected] Cell


Questions?

Documents

Shape-Based Rate Change Lance Whitson Vertical Account Manager Colleges and Universities NACUMS Sally-Ann Moss National Document Systems Specialist /Addressing