It’s that time of year when the budgeting process shifts into high gear, and mailers start asking about what may change in the coming year’s postage rates. The Postal Service’s 2020 rate proposal, filed with the Postal Regulatory Commission (PRC) last week, was mostly in line with what the industry had expected—at least for letter mailers. Our friends in the catalog industry (and other mailers of flats) may be more concerned by the wide variation in the amount of increase across flats rate tiers within Marketing Mail.
The postage rate adjustment filed by the Postal Service with the Postal Regulatory Commission (PRC) on October 9 calls for an average rate increase of about 1.9% for both First-Class and Marketing Mail. We expect the PRC to rule on the proposal around the third week of November. Assuming the PRC approves it, the proposal will take effect on January 26, 2020.
First-Class Mail Postage Rates
After hefty increases earlier this year, prices for single-piece (think forever stamp) First-Class Mail (FCM) will be flat in 2020. Commercial FCM (largely invoices and statements), on the other hand, will bear the brunt of FCM increases, with 5-digit automation letters going up 2.11%.
Marketing Mail Postage Rates
The increase for Marketing Mail letters stays pretty close to the average, with enhanced carrier route letters going up less than average after seeing larger increases earlier this year. Five-digit automation letters, entered at the SCF, increase 2.2%. High-density walk sequence carrier route letters, entered at the SCF, increase only 1.1%.
The Postal Service continues to shave drop ship discounts for Marketing Mail letters, reducing these worksharing incentives by about $2/M for 2020, to bring them in line with recent estimates of USPS costs avoided by receiving this mail deeper in the postal network. Logistics providers are cautioning that we are very close to a tipping point when the cost of preparing and delivering mail to destination postal facilities will no longer be offset by the discount offered. We hope this postage rate proposal marks the end of the adjustments to these discounts so it remains cost effective for service providers to continue drop shipment of mail, ensuring consistent and timely delivery of Marketing Mail letters.
Mailing Promotions on Tap for 2020
The Postal Service is proposing a full slate of mailing promotions for 2020. The roster and timing of 2020 promotions is little changed from what is being offered in 2019:
- Tactile, Sensory, and Interactive Mailpiece Engagement Promotion: Marketing Mail, February 1 – July 31, 2% discount off eligible postage
- Emerging and Advanced Technology Promotion: Marketing Mail or First-Class Mail, March 1 – August 31, 2% discount off eligible postage
- Earned Value Reply Mail Promotion: Business Reply of Courtesy Reply Mail, April 1 – June 30, once volume threshold is met, earns variable rebate depending on volume of reply mail returned during the promotional period
- Personalized Color Transpromo Promotion: First-Class Mail, July 1 – December 31, 2% discount off eligible postage
- Mobile Shopping Promotion: Marketing Mail, August 1 – December 31, 2% discount off eligible postage
- Informed Delivery Promotion: Marketing Mail or First-Class Mail, September 1 – November 30, 2% discount off eligible postage
While we don’t expect major changes in eligibility requirements, we won’t know the full details until the Postal Service publishes updated requirements documents for each of the promotions.
Have questions about optimizing your postal strategy for the new 2020 postage rates? Want to participate in one or more mailing promotions? Reach out to me or your IWCO Direct account team. We’re here to help!
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