DMA Double-Takes on Postal Rate Proposals

The Direct Marketing Association has back-pedaled on its earlier approval of postage rate increases suggested by the Postal Regulatory Commission last week and now expresses “disappointment” at portions of the recommendations.

The DMA said in a release Friday that closer review of the 700-page PRC recommendation produced one week ago revealed proposals to increase postage costs for catalog mailings by as much as 40% in some instances.

“The devil really did prove to be in the details,” DMA president and CEO John Greco said in Friday’s release, adding that “the outrageous rate increases” proposed for many types of flat mailings are far larger than expected and would lead to “a serious decline in mail volumes and a negative ripple effect for consumers, businesses and the economy.”

“The reduction in mail volume alone might well be enough to send the Postal Service into a death spiral,” Greco said, leading to lower revenue, deferred infrastructure investment and across-the-board rate increases down the line.

According to the DMA, the PRC called for much higher rates on flat mailings than those requested by the U.S. Postal Service in its omnibus rate request of May 2006.

Flats made up 8% of all first-class mail in 2006, 17% of periodicals and 75% of standard mail, according to USPS statistics supplied by the DMA. In some cases, the USPS contends, handling large but light flats costs more than processing smaller, heavier mail pieces.

Greco pointed out that a postal reform bill recently passed by Congress was intended to make postal rates more predictable, and that the PRC recommendations will engender “the very ‘rate shock’ that we sought to avoid.”

The DMA is urging that members fax letters to the USPS Board of Governors expressing concern over the PRC recommendations. The recommendations were forwarded on Feb. 26, and by regulation the board has to wait 10 days before voting on them, so the earliest date they could approve the PRC proposals is March 8.

The DMA’s first reaction to the PRC recommendations issued on Feb. 26 was an expression of “appreciation” for the agency’s efforts to cushion the impact of rate increases on individual, non-profit and commercial mailers.

“While higher postage costs are never welcome… we are pleased that the PRC did adjust the Postal Service’s revenue requirement,” Greco was quoted as saying at the time.

In the earlier release, DMA senior vice president for government affairs Jerry Cerasale expressed concern that the USPS might not give mailers time to adjust to the new shape-based systems. Fast approval in March by the Board of Governors could put the PRC regulations into effect by May 2007. The DMA has recommended that mailers be given 90 days to plan more efficient mailing strategies.