Getting Ready for New Rates

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

Well, the 2006 postal rate case is underway. That means that sometime in late Spring or very early Summer of 2007, new, higher postal rates will go into effect. The Postal Service already has started making the "sooner rather than later" noises that have long bothered the business mailing industry. It's not that they can't understand why rising costs eventually must be reflected as higher prices. Rather, it's just that they find exasperating that after 35 years under postal reorganization the Postal Service still doesn't understand the dynamics that drive its customers' businesses.

Contrary to what some think, getting ready to accommodate an omnibus postal rate change is not a simple matter. If would be one thing if implementing a rate increase was only a matter of plugging new numbers into old charts. Unfortunately, it isn't.

Despite all of the yammerings about "simplicity" in the rate schedule, even a cursory examination of the R2006 proposed rates will reveal that "simplicity" is not one of its hallmarks. Indeed, determining what your postal costs are likely to be under the proposed rates is virtually impossible without a computer. You not only have to factor in a change in rates within existing rate categories; you also have to determine the differential effects of some of the new rate categories the Postal Service has proposed.

Factoring in those old and new categories can be particularly thorny when you really won't know where your mail will fall until you know the rules that govern mail preparation, qualification, and entry. This also presumes, of course, that you already know what the Postal Rate Commission intends to recommend or what the Governors are likely to approve.

For many mailers, the challenge is even more daunting. Postal rate software has to created--something that's difficult to do until the Postal Service publishes its final rate schedules and mailing rules in the Federal Register That software then needs to be tested against all the other systems a mail-centered business uses to conduct its affairs and thoroughly debugged. Only after all this is through will a business have any idea how new rates and classifications are likely to affect its operation.

After 35 years, you would think the Postal Service has a firm grasp on the challenges facing its customers at rate-change time. When you hear some postal executives speak, however, you can begin to understand that this is simply not the case.