There is an invisible problem in the mailing industry that no one talks about. Not the Posts, not the mailers, not the regulators. No one is quite sure of its size, although operations people in the Posts do, and the Global Address Data Association, which I am forming, has a pretty good inkling.  I saw the size of the problem once in the international mail processing center of a major European postal system.  It’s called undeliverable as addressed mail (UAA).

That postal processing center receives mail from abroad and sorts it for domestic distribution. There are several steps in the sorting process which involve some various sophisticated technologies, as well as hands-on human intervention.  Suffice it to say that a substantial amount of mail stops here because the address is determined to be undeliverable.

If the postage on the mail merits it, the letters are returned to sender.   This, by the way, is a major problem for Posts who did not dispatch this mail because it comes from remailers or ETOE’s (extra-territorial offices of exchange- offices set up by posts in other countries to engage in export of mail). The only place the sortation center knows to return it is the country appearing as a return address, if there is one. And that postal system wasn’t paid to receive it. But that’s another problem.

If the mail isn’t “return to sender”, and most of it isn’t, it is burned. It is taken down the road a little bit to a big furnace that is used to heat water to run a dynamo which creates the electricity which runs this facility.

The problem, the bigger part of which involves domestically-originated mail, is huge. This particular plant helps heat and power the nearby very large international airport, as well as the postal center.

In the US, in 2005 the USPS said it was a $2 billion problem, which the Postmaster General said the USPS would cut in half by 2010. (We have asked how it’s going and will report.) Swiss Post states they handle 50 million pieces of misaddressed mail a year!

This, by the way, is a hidden tax on rate payers and an environmental travesty. As a matter of fact, you probably don’t even calculate the cost of this tax, because you don’t net out the returns from the number of pieces mailed in determining your ROI on a mailing, do you?

And as regards the environmental travesty, it’s a multiple travesty.  Energy is used to transport mail which is undeliverable, return it (maybe), and then destroy it or recycle it.   One company has estimated that all that Swiss undeliverable mail equals 1202 trees!  (Melissa Data, Where Did My Customers Go?, www.melissadata.com)

One of the solutions to this wastage is to make sure mailers have affordable, efficient, easy access to delivery point validation and change of address systems wherever they are mailing, and that they use them. If you can improve your ROI and reduce your cost-per-order, why wouldn’t you?

Why change of address systems?  The USPS says that some 75% of its UAA is because the addressee has moved.  If the USPS knows that, they can change the address.  So part of the solution is better use of the COA system by individuals.  But the larger part will be industry’s use of the USPS system.

But the US mailer is lucky.   Many countries don’t have these systems, and in some of them they are outrageously priced or inaccessible to mailers abroad! (The US is guilty of this latter point, by the way.)

For example, according to a study conducted for me by a close friend in the international data processing business, the cost-per-piece charged to clean a file of 5,000 pieces in each of 16 countries, from Australia to Europe, assuming a “hit rate” of 6%, varies form US 7 cents per piece (US, Denmark) to as much as US 64 cents per piece (Netherlands), with an average of US 20 cents.

The costs are absurd, and the systems designed to discourage use.  In some of these systems the mailer doesn’t get a clean address, only indication of undeliverability.

In some cases, the file must be submitted to a licensee who must be in that country. In some cases you also have to have your entire file validated at an extra charge. Most bizarre of all, in some cases, the system actually requires the addressee to pay to register to have her mail forwarded to her new address!

In short, there is no uniformity, there are no standards, and there is not as much use of these systems by the mailing community as there should be.

To help address this problem, the Consultative Committee of the UPU has launched a program in the UPU to promote the creation of both delivery point validation systems and internationally accessible change of address systems.

The new Global Address Data Association will be supporting that agenda vigorously, thus joining the UPU Postal Operations Council and the International Bureau addressing experts in the work now underway. Perhaps the next step at the UPU is to survey the  Posts which have COA systems to determine their characteristics and whether we can begin to identify best practices. A survey conducted some years ago by the Direct Mail Advisory Board has already identified those Posts who have such systems.

At some point not too far in the future we should have available to us universal delivery point verification and change of address systems. This may be in the new top-level domain now being constructed through the UPU, “dot Post”, another fascinating project of the UPU.

In the meantime, as a mailer, you should be asking your data processing company about accessing those systems that exist, and you and your processor should  join the Global Address Data Association to join the campaign to get a universal COA system operating.

Charles Prescott, Editor, The Prescott Report

June 3, 2010