Issue #99-13 August 13, 1999 *** THE LATEST ON NEGOTIATED SERVICE AGREEMENTS
*** *** PERSONAL COMPUTER POSTAGE NOW AVAILABLE
*** *** POSTAL SERVICE CONSIDERING EXPERIMENTAL
PROGRAM FOR PERIODICALS *** *** IS DAY-CERTAIN DELIVERY IN THE CARDS ?
*** *** WILL FIRST-CLASS DROP SHIPMENT BE AN OPTION ?
*** To clear the clutter about NSAs, Anita Bizzotto, USPS vice president
marketing systems, has committed to spend time discussing the issue with key
postal executives. She will gather all the views and intelligence within the
organization and then bring together representatives of the mailing community,
including MASA, to discuss how the Postal Service perceives the concept will
work. In addition, the Postal Service will assess if NSAs can be introduced
through the existing legislative and regulatory process. Bizzotto's plan is to
dispel the rumors, misinformation, and confusion and to initiate a comprehensive
dialogue with affected parties. This will help the Postal Service decide whether
negotiated service agreements could attain the benefits to the Postal Service of
increased revenue and/or efficiency and not pose unreasonable threat to any part
of the industry. *** It's Now "Click - Print - and Mail" *** A new way for
customers to purchase and print postage through their personal computers 24
hours a day, seven days a week, was unveiled after three years of research and
development. In announcing the new service Postmaster General William J.
Henderson said, "The Postal Service, historically, has been a pioneer in helping
the nation build its information highway." PC Postage products that are approved by the Postal Service produce an
information based indicia (IBI) which is a digitally encoded two-dimensional
barcode that postal customers can print directly onto envelopes and/or address
labels. Currently, four companies have products in beta test, two of which have
met the criteria for commercial availability. "Life just became a little bit
easier for those who mail, " said Pam Gibert, USPS vice president retail. "With
PC Postage you can purchase and print postage 24 hours a day, seven days a week
from the convenience of your home or office, " she said. PC Postage both enhances and protects the Postal Service's traditional
mission to bind the nation together and to support the growth of commerce
through personal, literary and business correspondence. The products which
support this service are developed by private enterprise and approved by the
Postal Service after successful test and evaluation. Products developed by
E-Stamp Corporation (www.e-stamp.com) and Stamps.com, Inc. (www.stamps.com) have
met the criteria for commercial availability. Products being developed by
Neopost (www.neopost.com) and Pitney Bowes (www.pitneybowes.com) are in beta
test. Henderson said, "We were there in the 18th century to encourage the building
of post roads to bind the nation together through mail delivery. In the mid-19th
century we encouraged the building of railroads to further support universal
service. In the early 20th century we encouraged development of a highway in the
sky for airmail. Today as the world approaches the new millennium, PC Postage
further increases universal access to postage." *** Experimental Program to Increase the Advertising Component of
Periodicals Unveiled*** An experimental program that would allow
advertising material to "ride-along" with periodicals sent through the mail is
being explored by senior officials at the Postal Service. Through relaxation of
current standards which limit what can be included in periodicals, the proposed
experiment would examine how much new revenue could be generated. Although the
proposal is still in the developmental stage, postal officials say it is likely
the Postal Service will be ready to present its concept to the Board of
Governors this fall. The Postal Service anticipates that this new option would increase postal
revenue by offering an opportunity to mail catalogues and merchandise samples
which are not currently distributed by mail. If that is accurate, the new
revenue gained through this "ride-along" concept will benefit all of the mailing
community by helping to keep future rate increases lower than would have been
possible without this new service. On the other hand, if this new option creates
an opportunity to transfer advertising mail currently being mailed either as
Standard Mail (A) or as First-Class mail, then there might well be a revenue
decrease which would not be beneficial to either the Postal Service or the
mailing industry. Although the rates for this proposed service have not been determined, it is
expected that the "ride-along" components would be charged less than the
prevailing Standard Mail (A) or First-Class mail rates for a comparable piece of
mail. Postal officials say the initial studies indicate this would be new
revenue from material that is now only included in newsstand copies of various
periodicals. The Postal Service does not anticipate migration of advertising
mail to this new option. Naturally, all interested parties will have the
opportunity to examine this experimental program when it is presented to the
Postal Rate Commission for a recommendation. *** Will Mailers Ever be Able to Promise Customers a Specific Day for
Delivery of Their Advertising Material? *** The ability to tell an
advertiser that his piece will receive in-home delivery on a specific day or in
a specific window of delivery days would greatly enhance the use of mail for
advertising. MASA representatives and other advertising mail organizations have
longed for such an alternative for many years. This topic again surfaced at a
meeting held in Las Vegas, Nevada, with Clarence Lewis, USPS chief operating
officer, and MASA representatives from the Northern and Southern California MASA
chapters as well as MASA Southwest. MASA Chairman Mike Dzvonik and Barry
Brennan, director of postal affairs, participated in the discussion. The group said this one important feature would enable MASA members to offer
their customers a promise of reliability and predictability that would allow
advertisers to schedule mailings and associated programs for maximum
effectiveness. There are other programs currently under development which will enhance the
Postal Service's ability to track and measure the delivery performance of
specific mailings and to better forecast volumes expected at various
destinations. The Blue Ribbon Committee, formed under Marvin Runyon and
comprised of CEOs from several major corporations and senior postal executives,
recommended the definition and publication of service standards for all classes
of mail. The MTAC workgroup formed to deliberate this recommendation recently
completed its task of defining what the Postal Service should measure and report
to mailers. The Planet Code will enable mailers and the Postal Service to track
mailings more precisely after deposit within the system. Therefore, this may be
the opportune time for the industry and the Postal Service to consider offering
a day-certain feature for advertising mail. Lewis was moved by the enthusiasm of the group and agreed to bring this
request back to postal headquarters for further consideration by the operations
department. He indicated that he was well aware of the operating requirements
that would have to be established to support day-certain delivery, but could
well appreciate the group's desire for such a product. He also agreed to bring
together representatives of the mailing industry to consider the value in
offering such a service and implications on the operating environment as well as
other segments of the mailing industry. MASA members and staff attending the
meeting were encouraged by Lewis' willingness to consider once again this
long-standing request from the advertising mail community. *** First-Class Mailers May See Drop Ship Discounts in Next Rate Case
*** PricewaterhouseCoopers has been hired by the Postal Service to
conduct research on whether mailers would take advantage of a drop ship discount
for First-Class mail entered at Destination Sectional Center Facilities.
First-Class presort mailers have been urging the creation of such a discount to
help stem the movement of transaction mail to the Internet. A decision has not
yet been reached whether it will be included in the next rate case, which is
expected to be proposed later this year. MASA members have been asked to provide information to PricewaterhouseCoopers
as part of the market research on this proposed new service feature. Although
the ultimate discount structure would have to be adjudicated through the Postal
Rate Commission for a recommendation, the study asks how much mail would be
entered at a destination entry unit under two possible discount scenarios - .4
cent or one cent discount. The study also establishes specific requirements to qualify for the
discounts. Again, these requirements might change under any formal proposal but
the following requirements are included for the purpose of the study: * Destination-entry means that mail is deposited at the Destination Sectional
Center Facility which corresponds to the three-digit ZIP Code of the destination
address of the mail being sent under the following time of day requirements: - Nonautomation First-Class mail must be deposited at the DSCF by 5pm - Automation First-Class mail must be deposited at the DSCF by 9pm * This destination-entry discount would be an additional discount on top of
the existing workshare discounts for presorting and prebarcoding. The level of
the discount would be the same regardless of mail shape (letter, flat, parcel,
or card) or other workshare preparation. * Mail must be bulk-entered presorted or automation First-Class; single-piece
mail will not be eligible. * All current mail preparation standards for presorted and automation mail
would still apply in order to receive the destination-entry discount. ** SHORT SUBJECTS ** * Chief Postal Inspector to Leave Postal Service * USPS Chief Postal
Inspector Ken Hunter will leave the Postal Service in October following a
35-year distinguished career to assume the position of president and CEO of the
Council of Better Business Bureaus. * Robotics Key to Postal Plants of the Future * Funding of $80.9 million was
approved for the purchase of 100 robots to replace the manual sorting and
loading of trays of mail into containers for transporting between processing
facilities. This doubles the number of robots currently deployed for this
purpose. * Postal Service Finances Look Good for Next Year * Successful cost
management in the current year has the Postal Service on track to achieve its FY
1999 operating plan for a $200 million net income. Richard Porras, USPS chief
financial officer, indicated the cost-saving efforts and expected mail volume
growth of 3.8 percent should enable the Postal Service to reach its FY 2000 net
income target of $100 million. This would mark the sixth consecutive year of
positive net income, something never before achieved by the Postal
Service. * Rate Case Appeal - U. S. Court of Appeals Rules in Favor of the Postal
Service * The U.S. Court of Appeals for the District of Columbia has ruled in
favor of the Postal Service in a challenge to its recently instituted postal
rate hikes, according to Inroads, an American Society of Association
Executives publication. Among the organizations challenging this increase was
the Alliance of Nonprofit Mailers which argued that the January 10 rate
increases were unfair because of the disproportionate impact they had on
nonprofit mailers. They also challenged the rate increases since USPS made more
than a half-billion dollars in fiscal year 1998 and because USPS is required by
law to break even. The court noted that "ratemaking inherently involves some degree of
imprecision, and, as this court has previously observed, it is not an exact
science."
In general, NSAs would allow the Postal Service
to reach an agreement with a postal customer for special rates or services based
on certain performance by that customer. Once an NSA has been agreed to for one
postal customer, other customers who are able to meet the same conditions would
have access to the same rate or service offering. As currently proposed in
postal reform legislation, NSAs would be available for both competitive (Express
Mail, Priority Mail, Parcels) and noncompetitive (First-Class, Standard Mail,
Periodicals) products. The Postal Service thinks NSAs will enable it to generate
new revenue or reduce costs by making arrangements that will draw in new
business or allow it to handle a customer's mail more efficiently.
The mailing community is sharply divided on
what NSAs will do. Some feel NSAs are primarily designed to benefit the very
largest volume customers who will be able to reach agreements with the Postal
Service for lower rates. This outlook has medium and small volume mailers
concerned that the criteria for these large mailings will be unattainable,
giving the larger mailers a competitive advantage. Associations for the
newspaper industry have said they can not support any postal reform which
contains a provision for NSAs as it would give the Postal Service an unfair
competitive advantage in selling advertising through the mail.
MASA has expressed support for NSAs but only
for competitive products. It is MASA's view that the proposed application of
NSAs would put smaller mailers at a competitive disadvantage. However, if NSAs
were available to the presenter of the mail, as well as the larger customers,
MASA members might see opportunities to generate new business. MASA is pondering
whether NSAs could be introduced in the absence of any postal reform or could
they be attached to other legislation as amendments. The overriding concern at
the moment is one of uncertainty because the rules to qualify for various
agreements have yet to be fully defined.