The rate shuffle Jul 1, 1998 12:00 PM
, Paul Miller
JobZone
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When it comes to postal rates, the news is mixed. While the odds of pushing
off a rate hike until next year are improving, the complexity of postal
rate schedules that catalogers will ultimately have to deal with is
increasing. "The nature of the changes in mail preparation and the various
ways catalogs are processed and delivered have made calculating postal
rates much more complicated," says Advertising Mail Marketing Association
president Gene Del Polito. "Its complexity is going to force more
catalogers to pay greater attention."
But first, the good news: At the U.S. Postal Service Board of Governors'
monthly meeting in early June, the governors chose not to decide on the May
11 rate recommendation of the Postal Rate Commission (PRC) or on the
implementation date, even though the governors had originally wanted to
implement the new rates on July 1.
This, most observers say, improves the likelihood that the governors will
succumb to mailers' and the PRC's pressure to hold off raising rates until
next January. (The board was to meet again June 29-30 and was expected at
that time to make a decision.) Del Polito says there are logical reasons
for delaying: "To implement the rates in August wouldn't give mailers
enough time to prepare, and they probably wouldn't want to change the rates
in September or October because of the heavy fall mailing season," he says.
Such an optimistic scenario naturally pleases most catalogers. "A January
1999 implementation date would be good news for us, because we'll be past
our prime mailing period," says David Hochberg, vice president of public
affairs for the New Rochelle, NY-based Lillian Vernon catalog of general
merchandise. "And with the rate increase likely to be less than we
expected, all in all it's good news for the industry."
Now, the not so good news
But whenever the new rates take effect, it's a sure bet that many mailers
will be confused by the vast number of rate structures and discounts.
In fact, it's hard to find two mailers whose rates will change in exactly
the same manner. Depending on the size, weight, and mailing quantity of
their books, catalogers' standard A mail rates will increase anywhere
between 1.8% and 7.4%.
At the most favorable end of the scale, mailers of heavy holiday catalogs,
such as outdoor gear and apparel mailer L.L. Bean, will pay the same base
per-pound rates they currently pay, which begin at 67.7 cents per pound.
The USPS had sought a 4% decrease in the base per-pound rate and decreases
of up to 23.9% for such worksharing efforts as barcoding, carrier route
presorting, and drop-shipping. But the PRC reduced most of the other rate
increases and chose to keep the standard A mail per-pound rate flat while
reducing the sizes of discounts for barcoding, carrier route presorting,
and drop-shipping.
"Overall, we expect a 1% increase in our postage bill," says L.L. Bean
spokeswoman Catharine Hartnett. For mailers of more typical-size catalogs,
such as Lew Magram, the 10 Brylane titles, and Miles Kimball, rates will go
up-but at manageable levels. Erv Magram, president of the New York-based
Lew Magram catalog of women's apparel, estimates his postal bill will
increase 2.5%-5%, "although it's closer to 5% from what I hear," he says.
Meanwhile, for Oshkosh, WI-based gifts mailer Miles Kimball, the increase
"is moderate, but it still adds up to $400,000 a year for us-and that ain't
hay," says chairman/president/CEO Mike Muoio. "We hope our increased
productivity will more than make up for it."
For Peter Canzone, president/ CEO of New York-based apparel mailer Brylane,
"we're still trying to figure out how the various discounts are going to
work for us. But it's sure not like the 18% combined hit we got a few years
ago with the paper price increases." Like Muoio, Canzone believes Brylane
can find savings to offset the rate hike.
Among smaller mailers, Frank Foster, co-owner of Fountain Inn, SC-based
military gifts cataloger Medals of America, says his $2 million-plus
company was planning a new edition and he hadn't yet figured out how much
more he'd be paying in postage. "At this point," Foster says, "the rate
increase will affect the way I plan this catalog. Depending on how large
the increase is, we might decide not to increase the size of the book from
32 pages, and we might reduce our paper weight from 70-lb. to 50-lb. to
keep our postage the same."
