The new postal order - increased postal rates

Three important trends are evident in the final postal rate decision--all important for magazine publishers and staffs to understand.

First, the Postal Rate Commission NPRC) made a conscious effort, which the Governors accepted, to distribute the burden of the rate increase more equitably between large and small mailers, and mailers with high and low editorial contents. Under the Postal Service's proposed rates, rate changes in different rate cells ranged from slight decreases to increases beyond 80 percent. Under the PRC's final rates, however, the degree of change in typical rate cells ranges only from 9 to 26 percent increases.

The wide variations in the Postal Service's proposed rate changes were caused not only by the zoning of editorial material, but also by the emphasis on pound rather than piece discounts. In addition, the Postal Service's original Delivery Office and SCF (Sectional Center Facility) discounts were only on the pound side of the equation. In contrast, the PRC put SCF and Delivery Office benefits on both the pound and piece sides.

What does all this mean in practical terms? Essentially, the range of rate increases in the final rates is much less drastic than what was initially proposed (although not necessarily more beneficial to magazine mailers). Rate increases for a 3/5-digit sorted, eight-ounce, 100 percent editorial book will be 23 percent in the Delivery Office zone, rather than the 3 percent proposed by the Postal Service; increases in zone 8 will be 24.32 percent under the final rates, rather than the proposed 73 percent increase. For four- and 12-ounce items, the result is much the same; for all publications, increases beyond the SCF zone are 23 to 25 percent.

Trying to work together

Second, the new rate structure plainly recognizes and rewards the continued worksharing efforts of mailers--particularly local mailers--as seen in the new discounts for Delivery Office entry and walk-sequencing at two levels. (the exception to this is the Governors' rejection of the pallet discount.)

Publications that can drop ship into an SCF or Delivery Office zone and that can walk-sequence come out of this rate case as the big winners. Local magazines and newspapers fall into this category. And, since this trend shows up in third-class as well as second, local bulk third-class mailers come out much better than other third-class mailers.

Not surprisingly, these are the same categories where competition from alternate delivery most affects the Postal Service. Many, if not most, of the millions of copies of weekly suburban newspapers that circulate each week do so via alternate delivery, and a good number of magazines delivered in urban areas have also moved to alternate delivery. By emphasizing local worksharing, the Postal Service is not so much attempting to get back some of the second class volume (although it might), as it is attempting to keep third class.

Given this new emphasis on local worksharing, publishers considering alternate delivery should cost out the new local Delivery Office and walk-sequenced rates first. There may well be a market out there for someone willing to collect titles in a city, marry them into 125-piece/saturation walk-sequenced packets, and then enter them into the local mail stream via Delivery Offices.

Keep in mind, however, that one-half of all the copies one takes to a Delivery Office must be for destinations in that Delivery Office, which could create a problem for drop-shipping mailers. (The exception is when the delivery office is the publication's original entry office.) Also, the Postal Service is requiring that plant verified second-class be transported in a sealed and locked truck--and the seal may not be broken before the truck enters a postal facility. A publisher that co-loaded newsstand copies with plant verified postal copies would be unable to unload the newsstand copies before the plant-verified load. I have a hunch, however, that something will eventually be worked out.

Third, both the PRC and the Board of Governors are firmly committed to automation, as shown by the host of automation discounts that permeate the rate design of first, second and third-class. Although the new discounts are for letter-size mail only, the day of the automated flat is soon approaching. A flats automation rate case will be filed later this year. Barcodes will be a common itm in the future, and alert distribution personnel will start preparing now. Check with your printer, your equipment manufacturer and your software people to find out what types of barcodes are coming and what you will have to do to print them.

Finally, don't overlook the second-class service cuts that the Postal Service is going to implement this summer. Last summer, the Postal Service realigned its overnight and second-day service standards, but announced that it would wait until summer 1991 to change any transportation that had second-class mail on it. Thus, expect that this summer a number of transportation changes will be made that will effectively reduce second-class service. The effect of these cutbacks may be far more severe and have a far greater effect on your magazine than the new rates, since subscribers lost during a recession are often quit hard to regain.

Robert Brinkmann is a Washington, D.C., attorney who serves as general counsel of the National NEwspaper Association and the executive director of the Red Tag NEws Publications Association.

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