Volume I, No. 4 December 1994 Newsletter

AVERAGE 4.8 Percent Rate Increase Recommended for Priority Mail

In the rate case filed on March 8, 1994, the Postal Service requested a 10.3 percent across-the board rate increase for Priority Mail. That request sought a markup over attributable cost of an astoundingly high 109 percent. For Priority Mailers, the Postal Rate Commission's recommendations to the Postal Service Board of Governors, released on November 30, contained both good news and bad news. For example:

Good News: The Priority Mail markup is reduced to 97.2 percent.
Bad News: The Priority Mail markup is still the highest for any class or subclass, and far exceeds that of First Class letters which, at 74.5 percent, has the second-highest markup.
Good News: The AVERAGE Priority Mail rate increase is only 4.8 percent. This compares extremely favorably with increases for any other regular rate class of mail. For example, First Class letter mail increased 8.9 percent; Express Mail increased 8.0 percent; Second Class regular mail increased 13.9 percent; Third Class bulk regular mail increased 14.0 percent; and Fourth Class Parcel Post increased 18.3 percent.
Bad News: Rate increases in a number of rate cells exceed 30 percent, with the highest rate cell increase reaching 33.8 percent.

New rates take effect on January 1, 1995 at 12:01 a.m. Priority Mail pieces that weigh up to 5 pounds continue to be unzoned (a proposal by the Postal Rate Commission's Office of the Consumer Advocate to rezone the rates for all lighter-weight Priority Mail was rejected). New rates also reflect an even increment of $1.00 per additional pound, up to 5 pounds. Old and new rates up to 5 pounds are as follows:

    Weight (lbs)    Old Rate    New Rate    Percent Change
    2               $2.90       $3.00        3.4%
    3               4.10        4.00        -3.1 
    4               4.65        5.00         7.5 
    5               5.45        6.00        10.1

The Postal Service Board of Governors has asked the Commission to clarify how it arrived at its Priority Mail rates (and its rates for Bound Printed Matter as well). How all of this will play out is unknown at this time.

APMU Joins MTAC

On October 19, 1994, APMU was officially admitted as a member of MTAC, the Mailers Technical Advisory Committee, to represent the interests of Priority Mail users. MTAC meets four times a year with the Postal Service to discuss various issues of concern to mailers, such as service, mailing requirements, mechanization, and automation plans, etc. Like all other mailer organizations represented on MTAC, APMU will have two delegates. For 1995 these representatives are: Jack Sigman of Nashua Photo Inc., Treasurer of APMU, and Lori Ware, of the Amway Corporation.

Priority Mail Volume Up Sharply in FY 1994

FY 1994 was a banner year for Priority Mail. Preliminary data indicate Priority Mail volume and revenue were up sharply in fiscal year 1994, which ended September 30, despite terrible delivery performance last winter and some very bad publicity during the year. The growth rate of Priority Mail outstripped all other major subclasses. With its high profit margins, Priority Mail has become the Postal Service's "goose that lays the golden eggs." Here are the numbers.

                            Percent
                FY 1993         FY 1994         Increase
    Volume      664 million     763 million     14.9%
    Revenue     $2.300 billion  $2.633 billion  14.5%

The two-pound rate, $2.90, accounts for the vast majority - 80 percent - of Priority Mail volume. In 1994, only 5 percent of Priority Mail used the zoned rates applicable to pieces that weigh in excess of five pounds.

Priority Mail Directory Now Available

Priority Mail is not a universal 2-day service, as regular Priority Mail users are aware. If you want to know in advance where to expect 3-day delivery, a new Priority Mail Directory is being distributed to window clerks. This lists all three-digit ZIP origin-destination combinations which cannot be reached within two delivery days. The information is provided in the form of a table of 3- digit ZIPs. It should be available shortly from your local post office.

New 7" x 10" Priority Mail Flat-Rate Envelope

APMU is working with the Postal Service to develop new Priority Mail products. The most recent product is a 7" x 10" red, white and blue envelope designed especially for mailing small products. The new envelope is designated as a 2-pound flat-rate product, which means that anything that fits within the envelope can be mailed at the minimum 2-pound rate, regardless of weight.

Clearly Identify All Your Priority Mail

All mailers should be aware that payment of the correct Priority Mail postage does not, by itself, guarantee that a piece will be handled as Priority Mail. In addition to the correct postage, the piece must be clearly and properly identified as Priority Mail. Otherwise, it could find its way into the regular First Class mail stream, and be handled as a First Class "flat" or "IPP" (irregular parcels and pieces). In theory, all First Class mail has a 3-day delivery standard. However, actual delivery performance of First Class flats and IPPs fare much worse, on average, than either First Class letter mail or Priority Mail.

Clear identification of every piece with Priority Mail postage should be standard operating procedure. The easiest way to begin is by ordering Priority Mail supplies from the Postal Service. The price is right! All the supplies you need are available FREE. Red, white and blue envelopes, boxes, stickers, address labels and other disposable Priority Mail supplies can be obtained by dialing 1-800- 222-1811; or, if you prefer, FAX your order to 1-800-270-6233. Regular Priority Mail users may file a standing order to receive supplies monthly or quarterly, which minimizes the time and effort required to reorder supplies.

1995 Calendar

APMU Meetings	March 30 - Washington, D.C. (tentative) June 15 - Washington, D.C. (tentative) August 30 - Philadelphia, Pennsylvania (tentative) December 14 - Washington, D.C. (tentative)
National Postal Forum	May 7-10 - Nashville, Tennessee August 27-30 - Philadelphia, Pennsylvania
MailCom 1995	March 5-8 - Atlantic City, New Jersey July 26-29 - Anaheim, California
MTAC Meetings	March 29-30 - Washington, D.C. June 14-15 - Washington, D.C. September 13-14 - Washington, D.C. December 13-14 - Washington, D.C.

Working for You ... APM>

Transfer interrupted!

> Representing Priority Mail Users on MTAC: APMU representatives will attend quarterly meetings of the Mailers Technical Advisory Committee in March, June, September, and December 1995. Publishing an Educational Newsletter: APMU will continue to publish its quarterly Newsletter (in March, June, September, December) which is a unique source of Priority Mail information. Supporting Improved Service: APMU will continue to work with the Postal Service Re-engineering Project to improve service for Priority Mail. Conducting Meetings: APMU will hold quarterly meetings during 1995, as it did in 1994. Serving as a Postal Service Advisory Body: APMU will hold regular meetings with the Postal Service's Priority Mail Product Manager and other Postal Service officials with regard to product improvements. Facilitating Information Exchange Among Members: APMU will continue to provide a forum to share Priority Mail ideas and experiences with other mailers at meetings and informally. Receiving News on New Postal Developments: APMU will continue to provide its members an unparalleled source of information of Postal Service plans for Priority Mail. Providing Access to Legal and Economic Information About Priority Mail: APMU will continue to provide the services of its legal counsel, William J. Olson, Esquire, and its economic counsel, John Haldi, Ph.D., as resources concerning Priority Mail. Assisting the Postal Service in the Promotion of Priority Mail: APMU will continue to provide speakers and other support to the Postal Service with respect to promoting Priority Mail at the National Postal Forums and other events. Serving as Industry Spokesman to the Media: APMU will continue to serve as a spokesman for Priority Mail users with respect to the postal trade press and other media. Providing Input and Monitoring Postal Reclassification: APMU will offer its input to the Postal Service regarding possible reclassification proposals for Priority Mail. Facilitating Experimental Postal Service Initiatives: APMU will be available to the Postal Service to participate in the testing of new services.

The Association of Priority Mail Users, Inc. is a nonprofit organization of Priority Mail users and suppliers to Priority Mail users which seeks to ensure that proper business and financial decisions are made by the United States Postal Service to promote and protect the cost efficiency and quality of service of Priority Mail. For information on APMU programs and membership information, please call 703-356-6913.

Association of Priority Mail Users, Inc. • 8180 Greensboro Drive, Suite 1070 McLean, Virginia 22102-3823 • (703) 356-6913 (phone) • (703) 356-5085 (fax)