Association for Postal Commerce
"Representing those who use or support the use of mail for Business Communication and Commerce"
"You will be able to enjoy only those postal rights you believe are worth defending."

LETTER TO THE EDITOR

The following is a letter to the editor of the PostCom Bulletin by Time Inc. Vice President, Distribution & Postal Affairs Jim O'Brien.

 The Postcom Bulletin is widely recognized for accurate and insightful articles, but the article titled “USPS Signals Efficiency Through Workshare Prices" in the March 13 issue missed the mark.  The Postal Service did not send clear pricing signals to reward efficiency in the case of Periodicals Class mail.  For example, a Carrier Route bundle on a 5-digit pallet received an increase of 267.5%, while a Mixed ADC bundle in a Mixed ADC container had a 25.24% price decrease.  What’s wrong with this picture?  How will mailers react to these signals?
 
In 2008, Time Incorporated created approximately 100,000 5-digit pallets, containing over 6,000,000 individual bundles.  Some of these pallets were created to satisfy the USPS 500 lb minimum requirement, but the vast majority were produced to streamline the process and allow the Sectional Center Facilities (SCFs) simply to cross-dock the pallets to the Destination Delivery Units (DDUs) and bypass any mail processing within the SCF.  The new rates tell us to eliminate these highly efficient pallets and put the 6,000,000 bundles on SCF pallets, which would require each bundle to be processed on an AAPS or SPBS machine and then transported to an outbound DDU truck.  The result of this shift will be bad for the Postal Service, Periodicals Class mailers, and our ultimate customer, the consumer.
 
Postal Service managers will see an increase in the volume of bundles to be processed on AAPS and SPBS machines at the SCFs. requiring more frequent sweeping of the machines and transportation of more containers to the outbound DDU truck. Additional bundles will fill up the machine’s containers more quickly and require more frequent sweeping of the machine.  These full containers will then need transportation to the outbound DDU truck.  Since not all bundles survive the pallet dumping and waterfall process, there will also be an increase in piece sorting.  This additional work will mean additional costs.  Unfortunately, Periodicals Class can ill afford to see costs rise when the class is currently only covering 83% of its costs.  In addition, our reduction of pallets in response to the signals in the new rates will reduce the amount of postage paid, resulting in a failure of those rates to generate the revenues that the Postal Service expected.
 
Finally, the consumer may experience delivery delays, especially if his or her copy is in one of the bundles that breaks open and requires additional piece processing.  Inconsistent delivery has a negative effect upon renewal rates, and lower renewal rates translate into lower volume for the USPS in Periodicals Class (the magazine), First Class (bills), and Standard Mail (renewal notices).  In the current economic environment, neither the Postal Service nor Time Incorporated can afford to lose customers.
 
The signals delivered in this latest rate increase do not all point in the direction of increasing efficiency.