NNA comments on eligibility for commercial flats failing deflection

Dec 29, 2009

Dec. 29, 2009

To: Manager, Mailing Standards
U.S. Postal Service
475 L’Enfant Plaza SW, Room 3436
Washington DC 20260-3436

From: Max Heath, National Newspaper Association Postal Chair & MTAC rep
Tonda Rush, Counsel, King & Ballow

Subject: Eligibility for Commercial Flats Failing Deflection, Federal Register Filing of Dec. 14, 2009

National Newspaper Association (NNA) comments on behalf of its 2,000 member newspapers, including weekly, multi-weekly, and daily Periodical newspapers, and their weekly Standard Mail shoppers, all predominantly DDU-entered flats. NNA objects to a proposal in this revised filing that would sharply increase Basic carrier route prices for flats that do not pass the three-inch angle of deflection test that has been recently proposed. NNA believes the proposal reflects unintended consequences of a policy that does not achieve its desired ends.

In short, NNA asks, at minimum, that USPS remove the proposed eligibility rule and price hike for Periodicals Basic rate carrier-routed flat mail entered at a DDU. The proposal would increase:

• in-county prices from 5.9 cents per piece found at line A13 of a 3541 postage statement to 10.5 cents per piece at line A10, a 78 percent increase.
• outside-county DDU-entered carrier-routed flats from 17.8 cents at line C25 to either 30 or 30.1 cents at lines C15/16 for a 69 percent increase. and
• ECRS Standard Mail DDU-entered Basic rate copies now paying 21 cents minimum at line I-12 to32.4 cents minimum at line E9 of a 3602-R postage statement, a 54.3 percent increase

The proposed increases are intolerable at any time, but particularly in a year when the Postal Service has already announced it intends no rate increase in the coming year. The increases are most emphatically intolerable from the viewpoint of sustained universal service, when USPS is struggling to grow its volume.

Reasons this Basic carrier-route rate eligibility/price hike should be withdrawn:

1. Under amended DMM 301.1.7, “Flat-size pieces mailed at saturation or high-density carrier route prices are not required to meet these deflection standards.”  NNA agrees with that decision, since many of its members use both price categories for ECRS shoppers, high-density for some part of their in-county carrier-route Periodicals newspapers, and saturation when “sampling” routes using their nonsubscriber privilege. But the exception does not go far enough. NNA sees no reason for this disparate treatment for Basic rate, especially when entered at DDU offices where no processing or handling in plants occurs between entry point and delivery offices. And, Periodicals Basic rate carrier-route sorted mail is virtually the entire subclass, with USPS billing determinants showing hardly any saturation and a little high-density.
2.  It is highly discriminatory to newspapers, which compete with marriage mailers for preprinted advertising inserts, to have their prices increase 78 percent on what is often the majority of their mailed Periodical copies, and usually some portion of their ECRS copies.
3. It is patently unfair and arbitrary to take mail properly presorted to postal carrier-routes and up-charge it to 5-digit prices, as if it was not carrier-route presorted, over some deflection standards which were originally in place for machinability, and are now being applied to non-machinable mail without a rational basis for doing so. This is especially true when entered at the DDU, or office of delivery, where the mailpieces can often be delivered as a “third bundle” on rural routes and even some city routes.
4. Such a price change reverses 30 years of USPS incentives for mailers to presort their mail to the lowest possible level to be more efficient. If so-called “flimsy” newspapers and shoppers are not to be allowed Basic carrier-route prices for 6/10 pieces up to 124 pieces per route, some mailers could, would, and perhaps should, simply revert to 5-digit sortation, rather than doing work for which no presort discount, or reward, was attendant. USPS should not be sending the wrong behavior “price signals” to mailers.
5. No evidence has been presented as to why non-auto Basic carrier-route presorted mail alone should be punished for failure to meet a lowered threshold of deflection, even if there is some cursory reason for applying this automation standard to non-automated mail. Likewise, no evidence was presented in past filings as to why non-auto pieces should have the angle of deflection test applied at all.
6. Newspaper publishers, along with their magazine brethren that requested the latest delay and rate specificity for adjusted deflection standards, are suffering from the deepest recession since The Great Depression, as is USPS. Fewer pages and a shift to lighter-weight paper stock are being forced upon the publishers, causing more flats to fail existing and new deflection standards. Under this perverse proposal, no bad luck goes unpunished. USPS, though hungry for customers, ironically makes it harder for them to stay in the mails with this price hike proposal.
7. Newspapers, in particular, have been moving away from their own home-delivery motor routes to Periodicals mail to save money under higher gasoline prices.  In-county subclass volume increased 12.8 percent in FY 2008 and 3.4 percent in FY 2009. RPW reports show this to be a rare growth category. Newspapers often mail higher-priced ECRS shoppers with them. Forcing newspapers back OUT of the mails with this arbitrary and unfair price proposal only stands to take ECRS with it. It makes USPS look foolish when it proclaims its desire to grow volume while punishing the newspaper subclass that actually provided it.
8. Unbound newspapers are in NO position to “make changes to slightly stiffen or redesign their ‘droopy’ flats to meet the new standards.” A major rebound in advertising and page counts might do that, but USPS has demonstrated no visible ability to stimulate the advertising markets for its newspaper mailers, nor would it be likely to help this market along if it maintains the discriminatory exception only for saturation and high density mailers, as noted above.  Many rural and suburban newspapers are struggling to survive as it is. There are no dollars to provide additional weight, for which the newspaper must both pay postage and pay to create.  The Postal Service may wish that minor tweaks in the product were easily available to publishers, but there is no evidence that USPS actually interviewed any newspaper publishers to determine whether this is so. NNA’s Postal Committee, representing the “expert witnesses” for the newspaper mailing industry, heartily assures the Postal Service that no such slight adjustments are feasible.
9. While some quarter-folded (close to magazine size) newspapers may meet the proposed deflection standard, most newspapers have moved to “half-folds” (USA Today size). That is in no small part due to a postal rule in the early 1990s related to the advent of flats automation which prohibited “insert protrusion” beyond the edges of the host newspaper. While that rule has since been dropped in favor of simply maintaining “uniform thickness,” fewer and fewer printing presses of newspapers, and especially their preprint customers, are capable of printing quarter-folds. There is no shelter to return to, in most cases. And, inserting machinery for newspapers does not work well, or at all, with quarter-folded host newspapers.
10. USPS offends its relationship with its Mailer Technical Advisory Committee members when it so expressly launches such proposals without using MTAC for due consultation, as it has in the past. NNA had no indication in the prior filing that such a rate differential for Basic carrier-route rate mail was in the offing. NNA was told that that proposal was intended to apply primarily to AFSM100-eligible flats. The proposal’s expansion to non-auto flats has, to our knowledge, never been explained nor justified. We did comment that if saturation was exempt, then so should high-density flats, since the publications using the latter were highly competitive with marriage mailers, and left it at that. That request was granted, but here USPS giveth with one hand and taketh away with the other.
11. NNA has virtually no faith in USPS BME training, especially at smaller offices where much of our membership enters their flats. Time and again, we see ignorance of rule interpretations and malpractice of enforcement of rules both real and imagined. With the high turnover under USPS downsizing, it is harder to find people even at the district level that fully understand flats rules, especially Periodicals. With the bifurcation of winners (saturation and high-density) and losers (basic carrier-route) in flats deflection, we expect turmoil if the rule/price to which NNA objects stands. And the likely subjectivity in how this test is done makes it highly unlikely that the same flat is ruled the same way at all entry points. These inconsistencies are usually widely communicated within the industry. They undermine customer confidence and make USPS appear to lack the stability and even-handedness its reputation requires. Inconsistency also tends to breed disruption, which stimulates wasteful use of mailer and USPS BMEU time. While HQ BME is extremely helpful to NNA, they are, in effect, doing a lot of “rework/retraining.”

In summary, the proposal seems to NNA to spring from an unexplained and unjustified premise. Its application to basic carrier rate mailers at DDU offices further undermines the rationality of the proposal. This is a rule whose provenance was to enhance automated mail sorting. It has wandered off that reservation and now is popping up in the DDUs where it is an ill fit for the operations, a disservice to customers and a perplexing communication from a Postal Service that just 30 days ago assured its customers it was striving for rate stability. NNA heartily recommends a retooling of the proposal to recognize the value of the efficiently prepared Basic carrier route DDU entered mail.