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Postal Rate Increase Considered

28 Aug, 2013 By: Doug McPherson

WASHINGTON – Marketers who use direct mail may need to revisit their 2014 budgets. The Affordable Mail Alliance claims the Postal Board of Governors will be considering an exigent rate increase in September. 

The alliance, formed by concerned associations including the Direct Marketing Association (DMA) and the American Catalog Mailers Association, sent a letter last week to Postal Board Chairman Mickey D. Burnett warning an increase could cause dire consequences.

An excerpt from the letter reads, “The mailing industry, and its suppliers, responsible for $1.3 trillion in sales annually, and nearly 8 million private sector jobs, are unanimous in our great concern that, notwithstanding the Postal Service's ongoing financial predicament, an exigent increase would cause severely adverse, and likely irrevocable, consequences for mail volume and revenue."

The letter also says an increase is premature because of proposed legislative reform and improved third-quarter results at the Postal Service: “It would not only be profoundly ill-advised, but clearly self-defeating to recovering postal financial stability.”

The U.S. Postal Service may ask for an exigent increase only due to “extraordinary or exceptional circumstances,” according to the Postal Accountability and Enhancement Act of 2006. The request must then be approved by the Postal Regulatory Commission (PRC), which must be convinced the increase is needed to maintain postal service.

The DMA reports that, last year, marketers sent some 87 billion pieces – 54 percent of all mail posted. A rate increase in excess of 5 percent – asked for by USPS and denied by PRC in 2010 – would substantially increase revenue.

Meanwhile, Congress is considering the Senate's Carper-Coburn Postal Reform Act that would remove rate-setting review from the PRC and return the power to increase rates to USPS. But even if it passed, USPS would still be required to present the same case for extraordinary circumstances combined with economical management to its board of governors.

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