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Direct Mail : State of the USPS

What marketers need to know about the Postal Service in 2014

October 2013 By Charley Howard
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As direct marketers, we're closely watching the changes at the United States Postal Service. Discussions about full-service requirements, the consolidation of facilities, elimination of Saturday delivery, proposed exigent rate increases on top of the annual CPI-capped increases, and the ongoing battle over postal reform continue. The decisions made on these issues will have a lasting impact on mailers.

Where do the big issues stand and what can marketers expect? Here is a consolidated summary to help you navigate 2014 and beyond.

Full-Service Requirements
In January, POSTNET Barcodes were sunset and replaced with the required Basic IMb (Intelligent Mail barcode). As this transformation has been adopted and in use for the majority of mail, the USPS continues to move toward Full Service IMb barcodes and technology. With Full Service, every piece of mail and container will be required to have a unique sequence number. Mailers will need to be Full-Service compliant starting Jan. 26, 2014.

Mailers have good reason to comply. A unique identification on each mail piece means the USPS can report on all mailing facets, from the entry or pallet scan to tray and bundle scans, in addition to standard processing. New reporting formats offer access to such data as piece size and shape, as well as presort levels and entry qualifications. With Full Service, mailers will realize more reliable and consistent mail delivery.

Because the USPS recognizes the process to become Full-Service certified is challenging, it has streamlined the testing process. Specifically, the certification has been split into two parts. Mailers should start the certification process as early as possible before the January deadline to avoid surcharges and the loss of automated discounts.

Network Rationalization
The USPS continues to consolidate postal facilities in an effort to right-size its internal network while maintaining high-level service. To date, service interruptions have been minimal—actually almost non-existent. As a result, the USPS has accelerated portions of Phase 2 consolidations to move some 2014 closures into 2013. In going from 417 mail processing facilities to fewer than 250, USPS will save $3.4 billion by 2017. Cost savings are already evident as USPS monthly losses continue to shrink.

Related to the issue of facility consolidation is the entry of mail and Postal Service performance standards. With Sunday counting as a processing day, the USPS will have to deliver mail drop-ship entered to a sectional center facility on a Friday by end of day the following Monday. This means enormous overtime. What's more, 60 percent of Standard Flat Mail is entered on Friday, inflating the postal cost for that product. The bigger issue, however, is moving as much drop-ship entry from Fridays to mid-week as possible, so it can get the mail delivered prior to the weekend. The USPS has performed load-level testing in Southern New Jersey on the weekends of Sept. 14 and Sept. 21 in an effort to minimize cost without impacting performance.

 
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