Washington—When the Postal Regulatory Commission (PRC) released its 700-page recommendation regarding the pending rate case, catalogers were hit with proposed price increases as high as 40%—twice as much as the U.S. Postal Service had proposed. Michael K. Plunkett, USPS’s acting vice president of pricing and classification, says the PRC’s action was “somewhat anomalous” from a historical perspective.
In the past, Plunkett tells MULTICHANNEL MERCHANT, the PRC’s actions “were to moderate where we went too far. Clearly, we always expect things to be changed. We considered our recommendations to be fairly aggressive. The direction they went and how severe some of those prices were was somewhat anomalous. The flats’ increases were so large and came so late in the process. They came at the very last minute of a very long process.”
The USPS introduced the current rate case in May 2006. The PRC released its recommendation on Feb. 26.
The rate case attempts to align how much the Postal Service charges for postage with the actual costs of processing the various types of mail. For that reason, a mail piece’s shape will be as critical as its weight in determining its postage. The current price structure is based primarily on weight, but the USPS has determined that certain large but lightweight mail pieces actually cost more to process than some smaller, heavier pieces. Another goal of the rate case is to encourage mailers to take on more of the mail preparation tasks, such as sorting, by offering work-sharing discounts.
In approving the PRC’s recommendation on March 19, the USPS Board of Governors asked the commission to reconsider its pricing recommendations for Standard Mail flats, the category affecting most catalogers. But there is no guarantee that the PRC will alter its decision by May 14, the date the rates are to go into effect.
If it isn’t resolved by May 14, Plunkett says, the pending rate hike for flats will become effective. If the PRC does reconsider and adjust the Standard Mail flats prices, Plunkett says a new implementation date for the new price of flats would “almost certainly” be set.
As far as how long it might take to resolve, “it depends on what the commission gives us back,” Plunkett says. “They could just give us back exactly what we gave them. The BOG can reject, send it back to the PRC, or we’ll just implement. If the prices are changed, we’ll look at exactly what they changed. We’d like to get this resolved as quickly as possible.”
Plunkett believes that some catalogers might convert to letter-size mail pieces and that they’ll seek more comailing opportunities. But he recognizes that if the proposed pricing for flats isn’t reduced significantly, “some volume will go away.”