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Business Costs & Regulation

Goodbye, Saturday Mail

That's not the only twist mailers will face in 2011. Rates will rise, too.

It’s true. Saturday mail delivery will be history come 2011 or so. As we forecast last September, the rising red ink faced by the U.S. Postal Service isn’t giving it much choice. The USPS will need the $3 billion or so that cutting delivery back to a Monday-to-Friday schedule will save. Postal officials see axing mail pickup and delivery and other postal services on Saturdays as being least disruptive to operations. Saturday mail volume is lower than that of other days -- around 11% of a typical week’s total.

Congress will hold its nose and OK the proposal made by Postmaster General John Potter, though it won’t do so until after the 2010 elections. Both Republicans and Democrats are grudgingly coming to the same conclusion as Potter: Declining mail volume means that cost cutting and higher postal rates aren’t enough to dig the USPS out of the hole it’s in. The USPS’ deficit this year is expected to exceed last year’s $4 billion.

Businesses that continue to rely on mail will simply have to cope. Retailers, auto dealers and others that now use ads delivered on Saturday to generate weekend sales will make the switch to Fridays, for example. Limited service, such as Saturday morning post office hours for allowing businesses to pick up mail and for maintaining Express Mail boxes in lobbies, is likely to continue, though outgoing mail won’t be processed until Monday.

Chances are that the move will bring more business to some companies, such as firms that analyze the best times to mail everything from bills to product and service promotions. With one less day to work with, it’ll be more important than ever for businesses to maximize the bang they get for their mailing buck.

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Don’t expect Congress to go along with calls by some conservative think tanks to privatize postal operations. But the USPS will, on its own accord, close more post offices and offer limited services, such as stamp sales and parcel shipping from kiosks staffed by postal workers, in supermarkets, pharmacies and office supply stores.

Odds are that the price of first-class stamps will go up 2¢, to 46¢, in 2011. Though the USPS will hold the line on postal rates this year, the Postal Regulatory Commission is likely to give USPS the nod for an increase next year that will exceed the inflation rate for the previous 12 months. Postage paid by business mailers probably will rise around 5% on average, or double the expected amount, despite the likelihood that the jump will accelerate the decline in mail volume.

And starting this month: A slew of changes for business mailers, aimed at trimming the USPS’ costs. On March 14, the USPS will end a costly service that allows companies to electronically monitor the performance of mail consolidators -- companies that bundle mail and drop it at mail processing centers. Consolidators’ customers now rely on the Electronic Mailing Data system to check that bills, catalogs and offers are getting in the mail in a timely manner and to analyze the effectiveness of their mail solicitations.

On March 15, the USPS will require that, for businesses to get a discount, at least 90% of mail they send must be read automatically by bar code scanners. That’s up from the 80% level required for the past two years. Missing the mark after March 15 will be especially costly: For companies that fall short, postage charged on all mail left for delivery that day will jump to about 33¢ per piece, a 40% hike. A boost to 95% bar-code-readability scores is likely to be made within a year.

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Then, starting in May 2011, the USPS will mandate the use of Intelligent Mail bar codes to receive volume mail discounts. That’ll require more upgrades to mailing systems, though at least the Intelligent Mail system will provide new benefits to customers, permitting companies to individually track each piece of mail. As a result, it’ll be easier for business mailers to determine the effectiveness of promotional mailing campaigns. And it’ll tip them off earlier to deadbeat customers that don’t pay their bills, helping companies decide when to initiate bill collection or legal proceedings.

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