New Systems Tame Rising Postal Costs

By Arend, Mark | ABA Banking Journal, November 1992 | Go to article overview

New Systems Tame Rising Postal Costs


Arend, Mark, ABA Banking Journal


It may be true that what goes up must come down, but don't look for postal rates to decrease any time soon. Aside from automated presort and bulk-mail discounts, postal rates climb almost predictably every two or three years and have yet to be seen moving in the other direction.

Next to health care costs and FDIC premiums, postal expenses are among the largest and most difficult costs for a bank to control.

As an industry, banks are the biggest user of first class mail in the country--banks account for about 10% of all first-class mail. Postal expenses generally run about 2% to 2.5% of bank operating expenses.

"As a rule of thumb, for every million dollars in assets, a bank sends out about 3,000 pieces of mail each year," noted Richard Nelson, vice-president of Wachovia Operations Services Corp. and Wachovia Bank of Georgia in a speech. "Therefore a bank with assets of $100 million probably sends about 300,000 pieces of mai1--97% of which is moved by first class."

At 29 cents per piece up to one ounce--and more for checking accounts--the cost for the same $100 million bank is about $85,000 per year, or $850 per million dollars in assets, said Nelson, who also chairs ABA's Postal Services Committee. Systems weigh in. Fortunately, mail room equipment is getting faster and, in some cases, smarter. One example is the Weigh-On-The-Way system available on Pitney-Bowes's Mail Center 2000. It eliminates the need for sorters that presort mail according to weight. Mail Center 2000 was introduced by the Stamford, Conn.-based company in July, following pilot testing at six banks.

The Jetstar line of multi-line, optical character recognition (MLOCR) sorter equipment, from Bell & Howell Phillipsburg Co., Allentown, Pa., now includes a model, the 1100, for companies with low to medium volumes of outgoing and incoming mail. The machine bar codes and sorts mail at cycling speeds of up to 15,000 envelopes per hour. The sorter also contains an on-line national ZIP+4 directory to identify the correct five- or nine-digit bar code. The ink-jet printer then sprays the U.S. Postal Service-certified bar code on the envelope.

At the top of the line, the Jetstar 3000 processes up to 36,000 envelopes per hour using an optical character reader, which scans a 3.5-inch-high area on the front of an envelope for the address. The unit interprets key parts of the address, looks up the correct ZIP code on the on-line directory, and prints the corresponding bar code on the envelope. Multi-font reading capability allows the Jetstar system to read addresses printed by typewriters, line printers, laser printers, and addressing machines. This reduces the amount of time spent manually entering address information and improves overall efficiency.

The centerpiece of Pitney-Bowes's Mail Center 2000 is the Paragon Mail Processor, which, when handling uniform mail, applies the appropriate postage to up to 240 pieces of mail per minute. The system also bills jobs back to specific departments and produces management and cost-control reports.

NationsBank of Tennessee, already a Pitney-Bowes customer, was one of the banks chosen to pilot Mail Center 2000. The mail operations center in Nashville services 63 retail branches and five other locations at the $5 billion-assets bank.

"We handle about 600,000 pieces of mail per month, and we will probably top 7 million pieces this year," notes Charlie Mason, the bank's mail services manager. …

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