Guest Column: Postage Rates Rising
The outlook for changes in publishers' postage costs next year ranges from virtually zero to the potential for double-digit increases that would put many publications out of business. It all depends upon the outcome of an unprecedented proposal that the United States Postal Service (USPS) has presented to the Postal Regulatory Commission (PRC).
As you likely have heard, the USPS filed a proposed pricing increase with the PRC on July 6. The proposal would raise postage an average of 5 percent to 5.5 percent for most market dominant mail classes. However, periodicals would see average increases of 8 percent, with more publishers reporting increases greater than 8 percent. The increases are relatively similar for most periodicals rates, except for 20-plus-percent increases for certain types of pallets, and Standard Mail parcels will go up 23 percent.
These changes would take place on Jan. 2, 2011, and would include some regulation modifications as incentives.
Before detailing some of the incentives and changes, the increase amount must be addressed. The USPS is requesting the increase under the "exigent clause" in the Postal Accountability and Enhancement Act, which allows changes in postage rates to exceed the rate of inflation (above Consumer Price Index parameters) under extraordinary circumstances.
Several mailer organizations and a newly formed alliance (Affordable Mail Alliance) are challenging the exigent increase as not meeting the criteria for which the clause was created. They believe that legitimate criteria would be a natural or man-made disaster that disrupted service capability for an extended period of time or disabled the Postal Service's ability to operate under optimum conditions. The exigent clause was added after 9/11 and the anthrax problems, and reinforced by damage from Hurricane Katrina. These organizations do not believe that poor USPS financial conditions meet the criteria.
Even more concerns emanate from the PRC. The PRC will be holding several hearings over the next 90 days and analyzing the request for higher rates. It can determine that the proposal is acceptable as submitted, modify it to reflect its economic analyses or reject it as unacceptable.
Ed Mayhew worked for the Postal Service for 37 years, becoming one of the most recognized experts on periodicals mail in the country. Ed was a part of the Rates and Classification Service Center (RCSC), ending his career as a Classification Specialist in the New Pricing and Classification Service Center in New York City. He has written rulings, instructions and articles for postal publications, appeared as an expert witness in court, a rebuttal witness for the Postal service at the Postal Rate Commission, co-authored postal handbooks and applications, and was the RCSC coordinator for six postage rate cases.
He is the 2002 winner of the Angelo R. Venizian award for contributions to the publishing industry, the first postal winner of that award in its history.
Ed has made training videos appearing on radio and TV, speaks at numerous seminars and is an 11-time top National Postal Forum speaker. He is founder and president of consultancy Eddie Mayhew’s Classification Station. Contact Ed at 973-462-5662, E-Mail at email@example.com or Twitter @eddiemclass.