The current postal rate case calling for a 5.4% across the board rate increase will likely be settled, predicted Gene Del Polito, president of the Association for Postal Commerce.
But he warned that the U.S. Postal Service will likely file for a higher increase — as large as 8% to 0%–in 2006.
“And that’s 8 to 10% on top of the 5.4%,” he said.
Speaking at a Direct Magazine Webinar, Del Polito said that the USPS was holding back on proposing changes in mail classification and other matters in order to get back money it lost as a result of the expiration in January of Public Law 108-18.
In late 2002, the U.S. Office of Personnel Management discovered that the USPS had overpaid the federal Civil Service Retirement System fund by more than $70 billion. The industry lobbied Congress, which then passed that law, which transferred the payment obligations to the U.S. Treasury but required that the USPS place the money it would have spent on those obligations into an escrow account.
Some classification changes that might come in a 2006 rate case probably wouldn’t be as extensive as those that took effect in 1996, when third class mail became standard mail. They probably will involve fine tuning such things as periodical and parcel rate as well as fine tuning things like delivery point sequencing and tightening requirements for list hygiene, said Del Polito.
The size and scope of the 2006 rate case probably depends on what postal reform bills, if any, are passed this year, he said.
At present, postal reform bills H.R. 22 and S. 662 are pending in both the House and Senate. Currently, H.R. 22 has been marked-up and reported out of the House Government Reform Committee. S.662 is still pending in Senate Homeland Security and Governmental Affairs Committee.
Can a postal reform pass this year? Del Polito gave odds of 30 to 70.
“The odds are weighted against having [a postal reform] bill go through the full process and show up on the President’s desk,” he said. “Those odds can change depending on the amount of pressure the various industry constituencies can bring to bear on the Senate, House and White House.”
In addition to lobbying their Senators and Representatives, Del Polito encouraged mailers to contact White House Chief of Staff Andrew Card to let him know how much a lack of postal reform is costing them as business people.
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