Industry groups blasted the U.S. Postal Service’s first exigency—extraordinary circumstances—rate hike proposal under the 2006 postal reform law. Mailer associations warned it could drive marketers further from the mail.
On Tuesday, the USPS proposed raising standard mail parcel rates by a whopping 23.3%, although it would raise standard mail letter and flat postage rates by 5% and 5.1% respectively and first class rates by an average of 5.4%.
“The Direct Marketing Association strongly believes that a postal rate increase at this time will cause mail volumes to decrease even further, and irreparably harm the financial viability of the Postal Service going forward, said Linda Woolley, DMA executive VP for government affairs, in a statement.
Woolley continued, “We question the need for a rate increase at this time, and strongly believe that it will further damage the economic viability of the Postal Service. The increase is not in the public interest, and ultimately, would have a devastating effect on any economic recovery since marketers rely heavily on mail to deliver offers, as well as products, to customers.”
“We understand what the USPS is trying to do, apportioning out pain to all stakeholders as part of its work to close the budget gap,” said Hamilton Davison, executive director of the American Catalog Marketing Association, in a statement. “With postage now representing more than half the cost of catalog marketing, this has fundamentally altered the business model and is forcing catalogers to migrate out of the mail. Given this, made worse by a terrible recession, the catalog industry is imperiled right now.”
The USPS was set later Tuesday to make a formal proposal before the Postal Regulatory Commission, which has 90 days to rule on it.
The USPS proposed hiking the rate for standard mail parcels, which are used to deliver small-size merchandise and product samples, to “help improve the postal service’s profitability.” said Maura Robinson, USPS vice president of pricing, at a press conference.
She added that even though parcels are currently classified as “market-dominant” products (those for which the USPS delivers the bulk of the volume) “all parcels operate within the competitive market regardless of how they are classified within our regulatory structure.”
She noted the USPS plans this fall to propose that all parcels be reclassified as competitive products.
The issue of how small parcels are priced is not new. In the USPS’s last rate increase in 2009—which averaged 3.8% across the board—the rates for standard mail parcels increased 16% http://directmag.com/directmail/standard-mail-rates-rise-0211/index.html.
What’s more, the USPS may be setting itself up for a battle over the legality of this increase.
The USPS maintains current conditions qualify it for an exigent rate hike as defined by the Postal Accountability and Enhancement Act of 2006.
The postal service made this filing because of a massive drop in mail volume over the past several years.
“We’re facing this problem because of a massive drop in mail volume and the fact that the bulk of our costs are fixed by laws, contracts or regulation and our operating flexibility is severely limited right now,” said Steve Kearney, USPS senior vice president of customer relations at a press conference Tuesday.
“An exigent price change is not only an option available under current law but it will also have much more immediate impact as opposed to the other strategies,” said Kearney. “It’s really one of the few tools available by law to help us meet this fiscal crisis.”
This, however, is a matter of dispute.
Already, a number of mailer groups have questioned the legality and even necessity of this filing. Click for more http://directmag.com/postal/0706-postal-uspstofile/.
