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Plan for Another Postal Increase, Cautions Expert

August 21, 2009 By Matt Steinmetz

With publishers and mailers everywhere keeping a cautious eye on the United States Postal Service (USPS) on issues ranging from rate increases to the elimination of Saturday delivery, Publishing Executive Inbox sought out the insights of postal expert JACK WIDENER. Widener retired a little over a year ago from Newsweek as director of finishing and distribution after a 29-year run with the company. Today, he owns and operates Publishing Postal Consultants LLC, a Manalapan, N.J.-based transportation and postal consulting business serving publications.

Widener says that although it's impossible to predict a rate increase for periodicals next year, publishers would be smart to plan for one.

INBOX: Do you expect publishers will be faced with a postal rate increase next year?
JACK WIDENER: Yes, no, possibly.

This question is impossible to answer at this point for a number of reasons. The normal process is for the amount of the postal rate increase to be determined based on the Consumer Price Index (CPI), with the amount [of increase] not being higher than the CPI by class of mail. The way the CPI is [currently] trending, it might even be a negative number, which would mean no increase.

But … the USPS has another means to raise rates in emergency situations which is called exigent pricing. A natural disaster causing a dramatic increase in cost would be one example. Does the present financial condition of the USPS, which is mainly due to loss of volume, qualify? Some in the Postal Service think it does, but Postmaster General John Potter has been very clear that he does not want to do that. But if [the USPS does] not get relief from Congress for retiree healthcare, support for reducing expenses, or an expanded opportunity to borrow money, then they might have to do that. They can file an exigency case at any time, so the new rates could be implemented before May of 2010, which is when normal increases are implemented. If they took this action I would think they would try to implement the rate increase around the normal May timeframe, so as not to disrupt an already delicate mailing industry.

The bottom line: Put some money in the budget for it. In my opinion, there are just too many challenges at this point not to take precautionary measures.

INBOX: With all of the uncertainty surrounding the future of postal rates, how would you advise publishers remain active rather than reactive in their projecting and budgeting as they relate to postal costs?

 

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