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Rate Change Announcement

New Shape Based Pricing model requires early planning and preparation

The USPS has scheduled a major rate change for Spring 2007 in order to face rising costs. This rate change will take effect on May 14, 2007 and is much different than any previous rate change. Instead of simply increasing postage rates based on mail class or weight, the Post Office will be calculating postage based upon the size, shape and thickness of the mail, in addition to the weight. This new process of determining postage due is referred to as Shape-Based Pricing.

This is actually the 1st proposed USPS rate change since 2001; the 2006 rate change was a result of a 2003 law requiring the USPS to place $3.1 billion in escrow. Experts predict that most mailers will experience an impact from this rate change like never encountered before.

The USPS is migrating to a Shape-Based Pricing structure in order to create a more efficient mail system. The USPS has assessed their operation, identifying the items that both add and reduce costs, and have built their Shaped-Based Pricing structure accordingly. The Postal Service has stated that these changes will position themselves positively for future growth.

Overview of Changes in Rate Structure

The proposed 2007 rate change is structured to encourage customers to prepare mail in ways that increase efficiency for USPS' processing capabilities. Essentially, mail items that are easier for the USPS to process will be rated lower than items that are not. This approach results in pricing that will be affected also by the size and shape of the item, with less emphasis placed on weight.

Key Initiatives:

• Because of their shape differences, letters, flats and parcels will now all be priced differently because they are all handled and processed differently.
• To encourage address quality and efficiency, reducing ACS fees and proposing a new, lower-priced OneCode ACS using the 4-state barcode.
• Pricing incentives to increase USPS efficiency, including container types, drop shipping locations, and mailpiece sorting

For detailed information about how you will be affected by the May 2007 USPS Shape-Based Pricing Initiative, choose from the product categories below:

View Solutions from MBM to offset these major changes and increases.