The July 1 postal rate hike will force mailers to make changes. Some will adjust mail schedules, the weight and size of catalogs while others, like small nonprofits, may have to cut back on services.
“Smaller community-based nonprofits who aren’t in the loop about these increases will probably have to cut back on their services to feed the $69 billion beast that is the U.S. Postal Service,” Neal Denton, executive director of the Alliance of Nonprofit Mailers said yesterday. He estimated that nonprofit rates overall will go up by 2.5% to 3%.
Yesterday, the U.S. Postal Service Board of Governors announced that it would raise rates by an average 1.6%, the second hike in six months, after the Postal Rate Commission (PRC), which approves rates, twice turned down Board of Governor (BOG) appeals of its 4.6% hike in January.
The rate for basic presorted flats will rise from $0.319 a piece to $0.322, an increase of less than 1%. The cost of mailing basic automated flats is increasing 1%, from $0.275 a piece to $0.278. The per-piece mailing cost for automated 3/5 flats will rise 1.2%, from $0.236 to $0.239. And the basic enhanced carrier route rate for flats is increasing 1.1%, from $0.176 to $0.178. The rates were reported from Washington yesterday, by Catalog Age’s Paul Miller.
Overall, standard mail rates have increased 10.3% since last December and parcel post rates — which are used by some catalogers for fulfillment — have gone up 4.4% since January.
“We’re going to have to do some calculations about our mailings and response rates” said Bruce Tillotson, database marketing manager at Cabela’s, a hunting and fishing gear cataloger in Sidney, NE. He said downturns in the economy don’t necessarily affect the firm’s business.
“The rate increase is really a blessing in disguise because it forces you to be even smarter,” added Arnie Zaslow, executive vice president at government supplies cataloger ATD American Corp., Wyncote, PA. “When postage is cheap, people tend to become lax.”
Although the increase isn’t staggering, ATD will explore things like changing the weight and size of its catalogs and mailing to more profitable prospect groups, Zaslow said.
The Direct Marketing Association blasted the decision to increase rates on top of the inflation-busting hike just four months ago. The new increase is expected to cost the U.S. economy approximately $1 billion additional per year, the DMA said.
“The Postal Service’s action just doesn’t make sense,” DMA CEO H. Robert Wientzen said in a statement. “On top of a slowing economy, this Postal Service double-header will make it tougher for everyone who relies on the Postal Service–consumers, online and offline businesses and non-profit organizations. No self-respecting business would try to increase or hold market share by increasing prices.”
Weintzen added, “The announcement is especially difficult to understand because it overturned the PRC’s repeated recommendations to leave postage rates at the levels set in January, and because the Postal Service continues to struggle with declining mail volume.”
At a telephone press conference yesterday, Anita J. Bizzotto, USPS vice president of product pricing and design, admitted that the decision by the BOG was the first since 1981 where it overruled the PRC in an omnibus rate case.
Postal officials also admitted that only $200 million of this new money will be used this fiscal year. The service kept first class postage at 34 cents.
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