The postal team at IWCO Direct has been fielding lots of questions about what’s happening with the U.S. Postal Service. As we discuss below, the Postal Service continues to deliver for the American public despite the challenges we all have been facing this year. One of the most frequent questions we receive in the fall is about budgeting and how to prepare for 2021 postage rates. Let’s take a look at what we know so far.
2021 Market Dominant Prices
The Postal Service presented their 2021 pricing proposal for Market Dominant products to the Postal Regulatory Commission (PRC) this past Friday. (Market Dominant products are the Postal Service’s monopoly products such as First-Class Mail and USPS Marketing Mail.) The PRC is required to determine whether the proposed rates conform to the CPI price cap by November 12. If approved by the PRC, the rates will take effect Sunday, January 24, 2021.
While the average increases were 1.5% for Marketing Mail (MM) and 1.8% for First-Class Mail (FCM), the proposal includes wide variation across the various rate cells, so actual increases will depend on the rate cells that make up any given mailing. Five-digit MM Letters entered at the destination Sectional Center Facility (SCF) are up only 0.8%, while High Density Enhanced Carrier Route MM Letters entered at the destination SCF are up 5.5%. Marketers whose mailings consist of a combination of these rates could experience a 2021 postage rate increase of around 3% depending on the proportion of rate tiers used. That said, High Density rates remain almost 17% lower than 5-digit rates.
FCM automation letter rates will rise about 2% in January, while most single-piece and presort FCM letter rates will remain flat. 2021 postage rates for FCM postcards are rising about 3.5%. Although all FCM automation and presort letters up to 3.5 ounces can be mailed at the same rate, the additional ounce rate for single-piece letters and all flats will now be $0.20.
2021 Mailing Promotions
The Postal Service will offer the same set of six mailing promotions in 2021 as it did in 2020. We anticipate minor changes to promotion requirements, but qualification will remain largely unchanged from this year. The 2021 promotions calendar is as follows:
- Tactile, Sensory, and Interactive: February 1 – July 31;
- Emerging and Advanced Technology: March 1 – August 31;
- Earned Value: April 1 – June 30;
- Personalized Color Transpromo: July 1 – December 31;
- Mobile Shopping: August 1 – December 31;
- Informed Delivery: September 1 – November 30
We’ll take a deeper dive into the details of these promotions in a future post.
Delivery Tracking Update
There have been no significant changes to USPS delivery performance since we first addressed the topic in posts (here and here) at the end of August. After a decline in July, the percentage of mail reaching its destination within USPS service standards has largely, if not entirely, recovered. While exceptions are still making the news, USPS management has become more adept at working through staffing challenges. Our mail tracking partner, GrayHair Software, has shared data showing mail delivery times, on average, have remained consistent since the beginning of 2019. Even in July, mail was taking only a day longer to reach its destination than the long-term average, and we continue to see Marketing Mail letters that were drop-shipped to destination SCFs hitting their in-home windows.
In addition, we do not anticipate the Postal Service having any difficulty delivering election (ballot) mail on time, or the increase in election mail having a significant impact on other mail in the USPS network.
Looking for more specifics?
Have concerns about 2021 postage rates or other postal issues? Contact me or your IWCO Direct account team for assistance. Your team can provide a more detailed looked at the new pricing structure as well as an analysis of how the new rates may impact your specific mailings.
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