A Brief History of Preferred Postage Rates

on Aug 20, 2012 in Pricing & Rates | 5 comments

Since the beginning of the Post Office and the Postal Act of 1792, certain types of mail have qualified for lower postage through preferred rates. It was assumed that these types of mailings yield social benefits for senders, recipients, and more importantly, a large nation. Preferred rates’ roots trace to the first federal postal policy, which recognized that disseminating newspapers at below-cost postage would advance the important social goal of educating the electorate. Soon after, magazines received special rates. For its first 50 years, the Post Office was predominantly a newspaper circulation service, because of the high cost of sending letter mail. (Sending a one-sheet letter 500 miles cost 25 cents, while sending a newspaper that distance cost only 1½ cents.)

Who Should Pay for Mail Forwarding?

on Aug 13, 2012 in Products & Services | 24 comments

More than 40 million Americans change their address each year, which means the U.S. Postal Service forwards an awful lot of mail. In fiscal year 2010, it forwarded 1.2 billion pieces. Under the Postal Service’s regulations, customers who fill out a change of address form have their mail forwarded to their new address for 12 months after the move. Mail forwarding costs the Postal Service almost $300 million a year. The cost to return mail to sender is another $800 million.

The cost of mail forwarding – and returning to sender and treating as waste — is baked into the overall First Class Mail rates, so all customers effectively pay for this service whether they use it or not. Canada Post has taken a different approach to mail forwarding, charging recipients either an annual or semi-annual fee when they move. Residential customers pay $75 for 12 months of forwarding and business customers pay $235. These prices increase slightly if the person or business moves to another province.

Is the Brand Suffering?

on Aug 6, 2012 in Finances: Cost & Revenue | 10 comments

The Postal Service has built a strong brand name around service, trust, and security. Few other organizations can lay claim to such a strong brand, one with more than 200 years of history and cultivated by the Postal Service’s consistent fulfillment of its mission to securely deliver mail to every American, regardless of location, at a reasonable price. For 6 straight years, the Ponemon Institute has named the Postal Service the most trusted government agency and one of the top 10 most trusted businesses in the nation. Many postal observers have encouraged the Postal Service to leverage this “trusted brand” to expand its offerings in the digital market.

But a steady drumbeat of bad news over the past few years around its financial situation, potential cuts in service, and uncertainty over its retail and network downsizing plans has unsettled stakeholders. The question many of them ask is whether the ongoing negative news coverage could be hurting the overall brand. Even the PMG noted earlier this year that the mailing industry is experiencing a “crisis in confidence.” Lingering uncertainty about the Postal Service’s future could further erode confidence. Further, competitors can use the turmoil to their advantage, touting their own services as easy and reliable in the face of uncertainty.