What with the continuing developments regarding a possible settlement agreement of the latest postal rate case (see cover story), the ongoing postal reclassification project has escaped attention. But if the reclass, dubbed Product Redesign, continues according to plan, by 2004 mailers could be rewarded with new discounts for handling more of the premailing processing.
The U.S. Postal Service and mailing industry experts embarked on Product Redesign this past May. It is tentatively scheduled to lead to a February 2003 rate case filing with the Postal Rate Commission (PRC). Don O’Hara, executive director of Product Redesign at the USPS’s Rosslyn, VA, offices, says the project has five key goals:
- to develop a flexible cost-based presort preparation and mail entry system;
- to define additional work-sharing opportunities particularly for mailers of flats and parcels, both of which were largely overlooked in the previous rate reclassification, implemented in 1995;
- to drive costs out of the postal system through incentive-based options;
- to have postage reflect actual costs more accurately; and
- to simplify rates, preparation, and acceptance of smaller mailings.
For instance, reclassification could offer incentives to catalogers that process their books in containers or pallets, “which isn’t the same structure as the existing bundle or packaging structure,” O’Hara says. “Once we figure out the best technique, we’ll want to change the preparation requirements to either encourage or require that flats be prepared on pallets.”
O’Hara is also hoping to develop a new product category for packages. “We have packages in nearly every class of mail, so there may be quite a bit of things we could do to make it simpler for mailers,” he says. “We might try to draw into a [small packages] category parcels from standard mail, lightweight Priority Mail, and Parcel Post.” This could allow mailers more drop-shipping opportunities.
As ambitious as Product Redesign is, at least one observer believes the project is “fatally flawed. There have been some proposals made, but no signal that the Postal Service has the stomach to undertake them,” says Gene Del Polito, president of the Arlington, VA-based Association for Postal Commerce. “It needs to be much more aggressively rethought.”
Del Polito contends that mail should be priced in reverse by starting with a final delivery charge and adding on surcharges for work-sharing not performed by the mailer. “That would signal to mailers to do everything they can to reduce postal costs,” he says, “or otherwise be prepared to pay the price.”
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