The executive director of the American Catalog Mailers Association (ACMA) told a congressional subcommittee that the U.S. Postal Service should be very concerned about many catalogers who have been forced to cut prospect mailings due to exorbitant postal rate increases.
ACMA Executive Director Hamilton Davison testified before the House Subcommittee on Federal Workforce, Postal Service, and the District of Columbia on Oct. 30 during a hearing titled, “Will Increased Postal Rates put Mailers Out of Business?”
The response that should alarm the Postal Service the most, Davison testified, is that “catalogers are deciding to cut prospect mailings – a vital source for new business and the key to the industry’s continued growth.” Cutting prospect mailings today “limits postal revenue tomorrow,” he added.
Standard Mail flats were hit hard by the May 14 postal rate increases. “It’s been brutal,” Davison said. “We expected 9%-12%; we got 20%-40%. This put enormous pressure on the entire catalog industry.”
Cuts in prospect mailings, Davison testified, “should concern the Postal Service, because if the trend is not reversed, it will be hard to check a downward spiral in volumes. A vibrant thriving catalog industry offers huge benefits for the Postal Service, not only by increasing mail volumes, but also by keeping mail a relevant and welcome form of communication. This past year’s drastic rate increases endanger the goose that laid the golden egg, and we would like to work with the Postal Service to reverse that trend.”
The latest postal rate hike was established according to the old rules of the U.S. Postal Service for rate cases. And the historic Postal Reform bill passed 11 months ago is supposed to preclude these types of prodigious increases.
The bill that passed, also known as the Postal Reform and Accountability Act – includes a rate-increase cap that ties future postage increases at or below the rate of inflation (Consumer Price Index) and strict criteria regarding conditions for emergency rate increases.
Postal Regulatory Chairman Dan G. Blair at the same hearing reported to the subcommittee that the PRC has posted its final order establishing regulations governing the modern rate-making systems for market dominant and competitive products, as dictated by the Postal Reform bill. The rules are posted on the PRC’s Website, and were finalized eight months before the statutory deadline.
The rules allow the PRC to adjust prices according to the CPI. “No longer will the Postal Service be constrained by the old cost of service regime,” Blair testified. “I am hopeful that the early release of these regulations will obviate the need for one last omnibus rate case under the 1970 law.”