New Rates and Rules for 2018

Posted on Oct 30, 2017

On October 6, 2017, and subsequently on October 24, 2017, the USPS® released information about what we can expect for 2018’s rates and rule changes.  These changes will go into effect on January 21, 2018.

The USPS filed changes for both competitive and market dominant products on this date. Below is a quick description of how BCC Software believes these changes could impact your business:

Competitive products: While this type of mail does not account for a very large volume of work for our customer base, we want to keep you aware of what is going on in the marketplace. Full details on the competitive changes can be found here. 

  • The competitive product changes had few surprises, with postage increases from 3.9-4.2 percent
  • Postages in this part of the marketplace are not limited by CPI, explaining the 4 percent change in postage
  • Based on the worksheets attached to the dockets, the USPS is raising rates to get processing costs and postages in line to make this a viable product for the future

Market Dominant products: This is the core processing area for our customers, so below is a detailed explanation of these changes. Full details can be found here. 

  • Structural changes to Presort
    • Changes to the pallet creation order for Flats mail entered in non-FSS zones (Marketing Mail / Periodical Mail)
      • The 5-Digit Carrier Route pallet level is now required as the first level for entry
      • The 5-Digit Merged pallet level is now required as the second level for entry
      • The objective is to create more Pure Carrier Route pallets for non-FSS entry
      • This should reduce pallet charges for these mailings as the 5DGCR pallet charge is lower than the 5DGMERGED charge
    • Addition of BPM Flats up to 24 OZ to Mixed Comail sortation
      • Adds additional applicable volume to Mixed Comail operations
      • Increase pool sizes for Comail, helping reduce postage
      • Reduce exception work for Heavy BPM flats
    • Small errata changes to Mail.dat, but no new version during the rate case
  • Pricing updates
    • There are currently no promotions scheduled for 2018
      • However, based on communication received on October 26, there will be a board of governors in place. You can find more info here. With two months left in 2017, it is possible they will approve some before the end the year.
    • Overall, the USPS exercising about 95 percent of their pricing authority. Below are some notable changes:
      • FC Auto flats (3DG-MXD) see a 6 percent drop in postage
      • Non-machinable STD letters up across the board, with the highest hike on 5DG (4 to 5 percent) for both regular and non-profit mail
      • Significant increase to STD Automation Flats for everything below 5DG sort (a 5 to 10 percent increase).
      • Carrier route rates are stable.
      • STD Marketing Parcels up 3 to 7 percent
      • Standard letter non-profit prices up in a cell-by-cell pattern ranging from 3-6.7 percent
      • Non-profit standard flats have big increases for non-auto rates at the piece level, but some reduction in pound rates.
      • Non-profit piece rates for automation up modestly for low sort levels, but dropped (up to 9.4 percent) for highly sorted automation
      • DDU entered BPM up 3-7.4 percent

Move Update and ACS change: In addition to the price and sortation changes, the USPS also published new rules on the Move Update standards to take effect in 2018.  You can read the full filing online here.

  • The move to census measurement is happening – and there is no going back
    • Merlin to be fully retired on January 21, 2018.
    • Thresholds are now handled by mailer per month rather than job-by-job, and the compliance threshold is .05 percent to generate an assessment. Penalties are for pieces that month over the threshold.
    • All assessments are for the trailing month, and are communicated through the Mailer Scorecard. This applies to all mailings, not just Full Service.
    • The new assessment rate will be $.08 per piece in violation, up from $.07
    • A fuller explanation of what pieces are exempt from measurement:
      • Mailpieces that are undeliverable due to an address change that is Temporary, Foreign, Moved Left No Address (MLNA), and Box Closed No Order (BCNO).
      • Mailpieces that are priced as single-piece.
      • Mailpieces that qualify for the Legal Restraint method.
      • Mailpieces without the documentation submitted electronically.
  • Extension of ACS to machinable and non-auto pieces for mailers over the 95 percent full service threshold
  • Some relaxation in the ACS requirements for Periodical Mailers, and clarification of the Move Update requirements

While the explained changes are not major on the mail preparation side, there are a lot of changes for address and recipient quality happening at the same time. As always, we are here to answer any questions you may have about the rate case. Get in touch with our Senior Product Manager, Mitch Carpenter, directly at mitchc@bccsoftware.com

 

 

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