Postal Matters: 5-minute Interview with MTAC’s Donald Harle

August 2006

singlepage

The rate case proposed in May by the U.S. Postal Service is full of complexities, extending beyond a rate increase to include changes to classifications, definitions, discounts and preparation rules. Between all these adjustments and the ever-looming possibility of postal reform, mailers are faced with only a vague idea of what their postal costs will look like come spring 2007, when the new rate case is slated to go into effect.

To help mailers get a handle on what all of these mail modifications may mean for them, Target Marketing reached out to postal expert Donald Harle, who currently serves as industry vice chair of the Mailer’s Technical Advisory Committee (MTAC) and vice president, postal affairs, for consultancy Diamond Marketing Solutions.

Target Marketing: Beyond the rate increase, what do mailers need to know about the new postal rate case?

Donald Harle: They should get the message that the Postal Service really wants to provide incentives for more efficient mail. Shape-based rates are a key element, and we’ll be hearing more about that. Letters are cheaper than flats, flats are cheaper than parcels, and we’re going to be hearing more of that in subsequent rate cases. The weight of the piece is becoming less important than the shape because shape is what really impacts … processing costs. This works very much to the advantage of First Class mailers, because First Class mailers [that] mail pieces at more than one ounce will actually see a reduction in their rates.

In this rate case, drop ship becomes even more important. Virtually every time the [USPS] has done a rate increase that is anything but a flat rate increase, the drop ship discounts have been improved. And that is happening this time as well. We are starting to see the [USPS] say, however, it wants [mailers] to drop ship more to where its equipment is, rather than just penetrating deeper into the system. This idea shows up with the elimination of the basic carrier route, DDU [Destination Delivery Unit] drop ship discount, and it will be more important in the future with the flats-sequencing system and as [the USPS] gets into network realignment.

TM: What can mailers do now to prepare for 2007’s changes?

DH: If they’re mailing flat-sized pieces, they should be testing now to see if they can reconfigure those pieces to meet letter-size requirements without hindering the effectiveness of the mail piece. … The other thing is looking at the implementation rules; there will be changes in definitions and preparation rules, and they should be looking at this as information comes out. Unfortunately, we’re going to be seeing this information piecemeal between now and when the final rules are written, virtually at the end of the rate case. The trade associations are good sources for keeping up to date on all that. The Direct Marketing Association puts out some good information; Association for Postal Commerce is staying right on top of these issues; Mailing & Fulfillment Services Association does also; and I’m sure the Alliance of Nonprofits will be doing the same. The Postal Service is using a frequently asked questions format in [its] DMM Advisory program to get … information to mailers. Mailers can receive these advisories by sending an e-mail to dmmadvisory@usps.com or visiting http://pe.usps.com/dmm advisory.asp. [Mailers] should also be talking to their production houses and logistics people about being aggressive with their drop shipping.

TM: Are we going to see any movement with postal reform this year?

DH: [In early June], there were rumors that a compromise on the key money issues was in the works. There was a rumor that the House was about to appoint its conference committee. And apparently the House has a rule that the conference committee report must be issued within 20 days of naming committee members. This was supposed to be the triggering point, and we haven’t seen it yet, but there’s still some optimism. If reform does happen, the mechanics exist in the rate process so that, theoretically, the Postal Service could go in and amend the [case] if it gets real rate relief. This may be a little hard for it to do when it is trying to incentivize behavior … maybe the Postal Service already has a plan of how it can do that. But that’s contingent on the [premise] that No. 1, reform happens and No. 2, there’s any real rate relief.

—Tracy A. Gill

• MORE ON
• DIRECT MAIL & POSTAL