Most Read
Most E-mailed
E-mail Article
Print Article
If you think the proposed postage increase in May will be business as usual, think again. For the first time ever, the United States Postal Service (USPS) will assess shape, as well as weight, in setting rates. The new system reflects the fact that certain types of mail require higher processing costs, and it passes those costs back to customers.
"Our pricing proposal recognizes changes in underlying costs and market conditions, and includes pricing initiatives to improve efficiency, which helps keep rates affordable for everyone," said Postmaster General John E. Potter.
Companies that conform to the new mailing regulations-specifically, by using automation-friendly packaging-will not face dramatic postage increases. In fact, certain changes can yield huge savings. However, firms that continue to use less efficient packaging will see price hikes of up to 40 percent.
How Did We Get Here?
In 1971, the Postal Reorganization Act transformed the Post Office Department into the modern USPS. Before then, the national postal system essentially operated unchanged for the a century, despite the overwhelming increase in volume.
The law established a new rate-setting procedure governed by a Postal Rate Commission. This body recommended postal rates and mail classifications for adoption by the newly formed board of governors. The legislation also required that rates for each mail class cover direct and indirect costs.
The Postal Reorganization Act saved the system from a state of crisis. Still, it did not account for automation. Today's postal machines can read an address, print a barcode, and sort at a rate of more than nine letters per second.
Certainly, this technology requires a significant capital investment-one justified by savings in time and money. The USPS realizes such savings when mail works with these tools.
Who Will Be Hardest Hit?
The proposed rate structure offers price incentives to encourage automation-friendly mailing. The plan also carries stiff increases for packages that require manual processing when more efficient options exist.
