It's 2006 and Inquiring Minds Want to Know

The following is a perspective by postal commentator Gene Del Polito for Direct magazine. The views expressed are the author's.

Inquiring minds want to know: What can business mailers expect in the year ahead? In a nutshell, a dollop of uncertainty served up with a heaping helping of change.

On January 8, postal rates rose 5.4%. Sometime within early to mid 2006, the U.S. Postal Service (USPS) will file its request for yet another postal rate increase to be implemented in 2007. While postal officials have discussed keeping the 2007 increase within the single-digit range, they have all but conceded that the percentage increase will exceed inflation.

This will be the first time in several years that either the Postal Service or the Postal Rate Commission have dealt with a rate case that requires a very detailed examination of all postal products' cost-price relationships. In addition, it's been quite some time since the Postal Service last proposed any significant structural changes to the mail classification schedule. Several of these sorts of changes is expected in the next rate case.

This will be the first rate case during which the USPS will have to square up the changing relationships with key sectors of its core business. First-Class Mail volume is likely to decline relative to Standard Mail growth. Will this mean that Standard rates will rise at an even greater than inflation rate? At this point, it's anyone's guess.

Despite its former affirmations about doing network realignment "below the radar screen," postal press reports have been abuzz with USPS announced facility reviews. Facility consolidations are likely to move briskly, and some of these consolidations will have an impact on how mail is prepared and entered into the mailstream.

This year, the USPS also is expected to accelerate its implementation of the flats sequence sorting (FSS) program. Expect the USPS also to change some of the rules as to how automation-compatible flats are to be prepared and where barcodes will have to be placed. Likewise, expect the prices charged for flats that are not automation-compatible to rise at a greater rate than those for automation-rated mail.

And, what about postal reform? Exactly! What about it? Chances are that H.R. 22 and S. 662 are dead for this Congress. If this is true, will anyone in Congress attempt passing a postal bill that is less comprehensive (and controversial) as past efforts have been? And if no one does, the impact for future postal rates will not be particularly rosy.

For sure, this is not time for mail-related businesses to slumber. It's time to get involved and stay informed.