We know you’ve been waiting for Tom’s latest update! So much has happened with the USPS in the last 1+ years, but we’re here to help you navigate this unchartered territory. Before we get into the actual updates that occurred this month, Tom wanted to be sure you understand the structure on how postage rates are charged.
A basic knowledge of sortation and destination entry will help with an understanding of the current rate structure.
Postal Sortation Qualification Requirements
The USPS offers discounted pricing for brands to sort the mail rather than having the USPS manage the sortation process. The higher the sortation level achieved by the brand, the lower the overall postage costs that are charged. Achieving sortation levels to minimize postage costs are totally reliant upon where pieces are going and what volumes are going to those destinations. Common sortation qualifications include:
From top to bottom, the deeper sortation requires less USPS processing results in lower postal rates to the customer. For mailers to achieve high density & saturation postal rates, there either must be a significant volume of mail, or it must be a very regional mailing.
Letter mail is sorted to the 5-Digit scheme rather than to the Basic Carrier Route level. The reason for this is because the USPS automation equipment will sort mail at the 5-Digit level, and they do not want mail in carrier-route bundles. The higher postage costs for Carrier-Route Letters discourage Carrier Route mail. There is an advantage for letter mail to sort to the HD, HD Plus or Saturation levels. However, it is very difficult to achieve without significant volumes. Sortation to more efficient levels is why cooperative mailing programs such as co-mail (flats & periodicals) or commingle (letters) exist and should be part of every mailing program.
Destination Entry
The USPS also offers discounts from the base rates if the mailer coordinates dropping the mail into the USPS at the destination rather than dropping at the mailer’s location. This is called destination or drop ship entry. For this to make sense, the mailer will determine where pieces are mailing to and calculating if the USPS postal discounts exceed the additional freight costs, that the customers will be responsible for paying, in transporting and dropping to USPS facilities at the destination.
From top to bottom entry levels, origin mail is simple, but offers no discounts because the USPS must take responsibility to ship pieces to their destination while progressively larger discounts are offered for NDC, CSF & DDU entry. DDU entry is difficult unless there is significant mail going into a specific (regional) area. Most larger mailers will enter mail at the SCF level.
This is just a quick snapshot of how postage rates are charged. However, we felt it was important to reiterate some of these details. We all read headlines about “rate increases” and industry-wide postage changes, so we thought it would be helpful to set the stage. Stay tuned for part two highlighting the actual increases from the USPS this month!
Next up: The July 2023 USPS Increase – what it is and how you can combat it.
