Cut Your Costs with Commingling

Cut Your Costs with Commingling

by John Kennedy, Three Dog Logistics

The New Year’s champagne bottles are empty and the party is a distant memory. Welcome to the jarring reality of 2012 and new postal rates! One week into the new year, we sent out an email inviting subscribers to pick up the new 2012 postal rates on our website. The response was astounding, and underscores the fact that postage costs remain a top-of-mind issue.

This is a good time to think about commingling as a strategy.

But first, a bit of background. What we once knew as Bulk Mail Centers (BMCs) has been re-engineered into a new USPS system of 29 National Distribution Centers (NDCs). Also, over the next several months and years, the 460 Sectional Center Facilities (SCFs) will be whittled down to 252. This combined network of NDCs and SCFs will consolidate the processing of originating mail into fewer sites to increase operational efficiency, decrease cost and improve service levels. The objective in commingling is to get your mail as dense and as deep into this system as possible, or “as close as possible to the final mile of delivery.”

To qualify for the lowest rates, your mail must travel through one of these centers- an NDC or and SCF – before delivery. This process is great for Standard mail. But there are minimum quantities or “densities” which apply: your mail must have minimum density of 150 pieces per 5-digit ZIP code, and meet certain requirements to drop ship to the NDC or SCF. As such, many “solo mailings” don’t qualify for the minimums or drop shipping discounts.

The practice of commingling allows mailers to achieve the minimum densities needed, while getting your mail as deep as possible into the postal network.

Here are a few things to keep in mind:

1. Don’t Make Your Mail Fly Solo
First, let your Logistics Provider commingle and combine solo mailings, to achieve a minimum density of 150 pieces per five-digit ZIP code. Once combined, they will drop-ship the mail to as many NDCs and SCFs as possible, so it can be processed more quickly at the lowest postage cost.

2. Know Which Mailings Might Benefit
Small to medium national-based Standard mailings, which do not qualify on their own for USPS drop shipping discounts are best suited for commingling.

3. Let Your List Be Your Guide
Which service you use depends on the mail format, service type, list composition and delivery time requirements, and varies for every mailing. For instance, smaller national mailings stand to gain the most in postal savings through commingling, because density is harder to accomplish if your list is spread across a wide geography. Conversely, a small, regionalized list can usually achieve enough density to qualify for postal savings its own. In that case, your logistics provider will be able to use their USPS drop shipping discount to attain a lower cost on postage.

The bottom line? Bring in your logistics provider early in the process to determine what options are available to you, so that you reach the lowest possible postage cost.

 

John Kennedy is CEO and founder of Three Dog Logistics in Baltimore.  He founded the company on the belief that logistics should be fully automated for the end user, taking the hassle out of scheduling and tracking of shipments.  Three Dog offers commingling, drop shipping, expedited services and freight programs to help clients save on postage and freight. Learn more or ask for a rate quote today at www.threedoglogistics.com.