Direct Marketing News - 2012 Essential Guide

PRINT | Direct Marketing Guide 2012
Mail tracking demand
U.S. Postal Service facility closures, a steep decline in overnight delivery of First-Class Mail
and the reduction of work staff and equipment creates a growing need for mail tracking

With mail volumes declining at a rate previously thought impossible, partic- ularly with First-Class Mail, the U.S. Postal Service is rightsizing with an
eye toward greater efficiency. Instead of a First-Class
Mail delivery standard dictating the processing and
transportation requirements of the USPS, it will be the
resulting network that dictates delivery standards going
forward, reports USPS management. Overnight deliv-
ery of FirstClass Mail soon will be history. Volume is
falling off so much and so fast that the USPS can no
longer afford to support the infrastructure to meet the
level of performance.
The most often-asked question we receive from adver-
tisers: “How will this affect my in-home dates for mail?”
The answer underscores the need for mail tracking,
now more than ever.
A planned USPS consolidation, down to 175 plants,
roughly one-third the size of today’s U.S. Postal Service,
will be a very big change and we really do not know
exactly how the mailing industry — incorporating First
Class, Standard, Periodicals, Parcels and Standardized
Services — will be affected.
When we look at mail, the volumes driving this change
come primarily from two mail classes: First-Class Mail
and Standard Mail. First-Class Mail volumes are pro-
jected to fall 47% to 41 billion pieces by 2020. Each per-
cent of First-Class Mail is $300 million in contribution,
meaning a $14 billion loss in contribution from First-
Class Mail. Standard Mail is projected to remain rela-
tively static over the 10-year period.
The loss in First-Class Mail means that Standard Mail
must pick up the loss or that the network must shrink to
support the cost. It takes three pieces of Standard Mail
to equal the contribution of one piece of First-Class
Mail. If the USPS doesn’t want to lose Standard Mail
through huge increases in postage rates, it must opt for
consolidating its network. Period.
Currently, First-Class Mail drives the network require-
ments with operating windows in place to support over-
night service. With the loss in First-Class Mail volumes,
the First-Class Mail network must be redesigned to sup-
port the mail volume and mail mix of the future.
Therefore, the USPS is in the process of defining the
most efficient mail processing network and infrastruc-
ture to match its current and projected workload. The
“It takes
three pieces
of Standard
Mail to
equal the
contribution
of one piece
of First-
Class Mail. ”
USPS has indicated that service standards will be affect-
ed, mainly on First-Class Mail, which some commer-
cial mailers rely on for time-sensitive messages. Other
classes of mail such as Standard Mail will experience a
less negative impact.
The biggest change with the largest potential for de-
livery impact of time-sensitive Standard Mail has to
do with the linkage between the SCF (sectional center
facility) and its DDUs (destination delivery units). With
only 175 plants, each SCF will have nearly three times
the number of delivery units to support and serve than
currently in place. More to the point is the geography
each SCF will cover — again, roughly three times the
distance. This is where the risks lay.
Instead of DDUs within and up to 50 miles to 100
miles away, the DDUs served will be within and up to
several hundreds of miles away. Does this mean that
the equipment utilization will be staggered so that the
furthest DDUs are processed and dispatched first and
then the closest last? This would seem to make sense if
better efficiency of vehicles is to be achieved. If this is
the case, delivery performance impact will be minimal.
If not, those of us whose drop-shipped mail enters the
mail stream might need to stagger entry to the same
facility with the furthest DDUs entered one day and the
closer ones entered the next day. This is a concern that
can be managed by your mail service provider.
The skinny? Depending on class of mail, its shape, the
type of processing required and location, there will be
new time-of-day strictures for facilities that survive and
new, potentially longer routes to get advertising mail to
these facilities. Recalibrating production, transportation
and delivery to postal facilities will be necessary. Further,
it will be absolutely necessary for mailers to track their
mail through postal processing to ensure in-home dates
and to troubleshoot while mail is in USPS’ hands.
In short, mail tracking is important now. While it’s
alarming to see facilities close, it’s also something we can
manage from the outside. We have to do so. ■
Charley Howard is VP of postal affairs and
Chris Armstrong is VP of mail tracking
services at Harte-Hanks. Reach them at
charley_howard@harte-hanks.com and
chris_armstrong@harte-hanks.com.