Business

Postal Service Gets “Exigent” Rate Increase, But Not Forever

The U.S. Postal Service persuaded the Postal Regulatory Commission to allow a temporary increase in the postage rate last week, but industry groups say the move could prove a major blow—even with the expiration date.

The U.S. Postal Service persuaded the Postal Regulatory Commission to allow a temporary increase in the postage rate last week, but industry groups say the move could prove a major blow—even with the expiration date.

For direct marketers and publishers, this delivery was a lump of coal.

On Christmas Eve, the Postal Regulatory Commission (PRC), in a 2-1 vote, approved the U.S. Postal Service’s request for an “exigent” rate increase, which will drive postal costs up by roughly 6 percent over the next two years.

Although the price hike isn’t permanent, direct marketing and publishing firms are raising concerns over the decision. More details:

About the approval: On December 24, the commission approved the increase (PDF), but only temporarily, rejecting the USPS request for a permanent change. The increase, which will raise the price of a first-class postage stamp from 46 to 49 cents and affect magazines, newspapers, and other forms of direct mail, combines a 4.3 percent “exigent” increase with a 1.7 percent inflation-related increase that the commission had already approved. The move, designed to help the USPS recoup $2.8 billion lost as a result of a decrease in mail during the recession, requires the Postal Service to create a plan to phase out the rate increase within two years. A 2006 law allows for an increase in the postal rate of up to 10 percent in emergency circumstances.

Associations react: Several groups whose members rely heavily on mail delivery—including the Direct Marketing Association (DMA), the Greeting Cards Association, and MPA: The Association of Magazine Media—called the decision a major blow to industries that are already struggling. Jerry Cerasale, DMA’s senior vice president of government affairs, said the PRC should have set an end date for the increase. “The commission says the USPS should recover the losses due to the Great Recession in less than two years,” Cerasale said in a statement, “but will await quarterly volume and financial results from USPS to determine any phase-out date. That is a cop-out.” The Greeting Card Association’s Rafe Morrissey, meanwhile, was more positive about the temporary status of the rate hike, but argued nonetheless that the move “will exacerbate the Postal Service’s current financial crisis by driving away much-needed mail volume to other competitors.” MPA President and CEO Mary Berner called the PRC’s decision “counterproductive” and says the group may appeal it in court.

This was the second attempt by the USPS to push for such an increase, after an unsuccessful effort in 2010.

(Photo by Justin Sullivan/Getty Images)

Ernie Smith

By Ernie Smith

Ernie Smith is a senior editor for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

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