The U.S. Postal Service Board of Governors (BOG) approved on March 19 the majority of the recommendations issued by the Postal Regulatory Commission (PRC) regarding the pending rate case. But the board did leave open the possibility of price revisions for Standard Mail flats, the category affecting most catalogers, before the May 14 implementation date.
In its decision, the board stated that “the Governors are concerned that price increases recommended by the PRC may impose an unnecessary degree of ‘rate shock’ on the catalog industry, particularly small businesses. The recommended increase for some catalog mailers is as much as 40%, which is more than double what the Postal Service had proposed.”
Although the BOG has asked the PRC to reconsider its rate recommendations for Standard Mail flats, May 14 remains the current implementation date for all classes of mail except periodicals. That’s eight days later than the originally expected date of May 6. The BOG delayed implementation for periodicals until July 15.
Don Landis, vice president of postal affairs for Menomonee Falls, WI-based printer Arandell Corp., tells MULTICHANNEL MERCHANT that many of the PRC’s recommendations for periodicals “came right out of left field,” prompting a variety of time-consuming software upgrades. “That’s why the periodicals get the extra two months,” he says, adding that “even May 14 for Standard mailers is pushing it.”
That the implementation date for the Standard Mail increases remains May 14, the same date as implementation of the noncontested First Class rates, suggests that the chances of the PRC altering its recommendation are slim. “It’s hard to believe that they’d just up and change it all,” says Landis. “There is hoping and wishing, but… I don’t see anything drastic happening.”
Although dispirited, Jerry Cerasale, senior vice president for government affairs for the DMA, says, “It’s not over.” There’s still a small hope that the PRC will overturn their decision and mitigate this impact, he says, or that the BOG will at least delay implementation for technical reasons, as it did for the periodical rates.
Bob McLean, executive director for the Arlington, VA-based Mailers Council, says his group has pushed for a standard 120-day implementation period after the rate case decision is published in the Federal Register. The current lead time of less than two months “is not enough time for us,” he says.
As far as the winners and losers in this rate case, McLean says, “If you’re in the catalog business, this is very serious. If you’re in the periodical business, you’re pretty happy. I think what will happen is a lot of catalogers will look at alternative media and cutting mail volume. Historically this tends to show right after a rate case. But the increase is so substantial for catalogers that many people will rethink their business models.”
MULTICHANNEL MERCHANT produced two Webinars that look at the effects of the pending postal changes on mailers. You can access those Webinars for free, on demand, at multichannelmerchant.com/events/webinars/rate_update/ and multichannelmerchant.com/events/webinars/rate_case_2006/.