Postal Rate Increase Is No Surprise. But Why Now?
Mailers knew the 2% inflationary adjustment was coming, but they'd have preferred it came after the exigency case was settled.
Key members of the mailing community were not surprised that the U.S.Postal Service took the inflationary rate adjustment it would customarily have asked for months ago, and they were not alarmed at the 2% amount of the hike.They just wanted to know why the Postal Service couldn't have held off for a few more weeks to learn the D.C. Court of Appeals decision on whether exigency will stay or go.
“We know the appeals court is going to release its decision soon. We would have preferred they waited for that and then ask for the CPI increase in June or July,” said Hamilton Davison, president and executive director of the American Catalog Mailers Association. “The rate issues would be more settled then and it would give mailers a longer period of stability with which to plan their mailings.”
Mailers also expected the higher rate for standard flats, whose rate the Postal Service is scaling up to bring the category to break-even status. The rate increase for flats is 2.5%, and a similar bump is expected again in 2016.
In turn, USPS is structuring pricing to encourage the use of the Flats Sequencing System. “The Postal Service is using rates to incent mailers to go with FSS carrier pallets, in which the mailer would presort mail by carrier routes and stack it on pallets dedicated to one five-digit code,” noted Jerry Cerasale, a consultant for the Direct Marketing Association on postal matters. “There are some incentives in [the rate notice] for mailers to do different things to reduce their rates.”
The jury's out as to why the Postal Service couldn't wait for the Court of Appeals. Perhaps, with oil prices plummeting, postal management rushed out the rate change before the CPI dropped in kind. Or maybe outgoing Postmaster General Pat Donahoe sought to unburden successor Megan Brennan of another problem to deal with in her first 100 days.
“I'm not really sure why they did it now unless they're really confident they're going to win that appeal,” said Joe Schick, director of postal affairs for Quad Graphics. “We're all just as confident that we're going to win it, too.”