Anyone who reads Multichannel Merchant on a regular basis knows about the potential massive postal rate increase coming in the next year or two for catalogers. Some industry experts believe the U.S. Postal Service will phase the increase in over a span of a few years, rather than throw a 22% rate hike at catalogers in, say, 2012.
But nobody knows for sure.
The Postal Regulatory Commission’s Annual Compliance Determination for fiscal 2010 found that rates for Standard Mail flats are not in compliance with the 2006 Postal Accountability and Enhancement Act when it comes to “a fair and equitable apportionment of the cost of postal operations.”
The attributable cost of Standard Mail flats in fiscal 2010 exceeded revenue by $577 million, resulting in a cost coverage of 82% with a loss of 8.2 cents per piece. The ACD directs the USPS to devise a plan to improve the cost coverage of Standard Mail flats.
The PRC wants the USPS to fix the problem swiftly, which could lead to a devastating rate increase of 22.3% to bring flats to full cost coverage.
I think one of the big questions lies in what can the industry do as a group to fight this potential rate hike. Hamilton Davison, president and executive director of the American Catalog Mailers Association, says that the letter mailers are being aggressive attacking catalogs. “They also have a lot of credibility with the PRC.” And the PRC prefers to base its decision on the written record submitted to it, “and that record is not flattering for catalogs.” more