The rate shuffle

When it comes to postal rates, the news is mixed. While the odds of pushing off a rate hike until next year are improving, the complexity of postal rate schedules that catalogers will ultimately have to deal with is increasing. “The nature of the changes in mail preparation and the various ways catalogs are processed and delivered have made calculating postal rates much more complicated,” says Advertising Mail Marketing Association president Gene Del Polito. “Its complexity is going to force more catalogers to pay greater attention.”

But first, the good news: At the U.S. Postal Service Board of Governors’ monthly meeting in early June, the governors chose not to decide on the May 11 rate recommendation of the Postal Rate Commission (PRC) or on the implementation date, even though the governors had originally wanted to implement the new rates on July 1.

This, most observers say, improves the likelihood that the governors will succumb to mailers’ and the PRC’s pressure to hold off raising rates until next January. (The board was to meet again June 29-30 and was expected at that time to make a decision.) Del Polito says there are logical reasons for delaying: “To implement the rates in August wouldn’t give mailers enough time to prepare, and they probably wouldn’t want to change the rates in September or October because of the heavy fall mailing season,” he says.

Such an optimistic scenario naturally pleases most catalogers. “A January 1999 implementation date would be good news for us, because we’ll be past our prime mailing period,” says David Hochberg, vice president of public affairs for the New Rochelle, NY-based Lillian Vernon catalog of general merchandise. “And with the rate increase likely to be less than we expected, all in all it’s good news for the industry.”

Now, the not so good news But whenever the new rates take effect, it’s a sure bet that many mailers will be confused by the vast number of rate structures and discounts.

In fact, it’s hard to find two mailers whose rates will change in exactly the same manner. Depending on the size, weight, and mailing quantity of their books, catalogers’ standard A mail rates will increase anywhere between 1.8% and 7.4%.

At the most favorable end of the scale, mailers of heavy holiday catalogs, such as outdoor gear and apparel mailer L.L. Bean, will pay the same base per-pound rates they currently pay, which begin at 67.7 cents per pound. The USPS had sought a 4% decrease in the base per-pound rate and decreases of up to 23.9% for such worksharing efforts as barcoding, carrier route presorting, and drop-shipping. But the PRC reduced most of the other rate increases and chose to keep the standard A mail per-pound rate flat while reducing the sizes of discounts for barcoding, carrier route presorting, and drop-shipping.

“Overall, we expect a 1% increase in our postage bill,” says L.L. Bean spokeswoman Catharine Hartnett. For mailers of more typical-size catalogs, such as Lew Magram, the 10 Brylane titles, and Miles Kimball, rates will go up-but at manageable levels. Erv Magram, president of the New York-based Lew Magram catalog of women’s apparel, estimates his postal bill will increase 2.5%-5%, “although it’s closer to 5% from what I hear,” he says.

Meanwhile, for Oshkosh, WI-based gifts mailer Miles Kimball, the increase “is moderate, but it still adds up to $400,000 a year for us-and that ain’t hay,” says chairman/president/CEO Mike Muoio. “We hope our increased productivity will more than make up for it.”

For Peter Canzone, president/ CEO of New York-based apparel mailer Brylane, “we’re still trying to figure out how the various discounts are going to work for us. But it’s sure not like the 18% combined hit we got a few years ago with the paper price increases.” Like Muoio, Canzone believes Brylane can find savings to offset the rate hike.

Among smaller mailers, Frank Foster, co-owner of Fountain Inn, SC-based military gifts cataloger Medals of America, says his $2 million-plus company was planning a new edition and he hadn’t yet figured out how much more he’d be paying in postage. “At this point,” Foster says, “the rate increase will affect the way I plan this catalog. Depending on how large the increase is, we might decide not to increase the size of the book from 32 pages, and we might reduce our paper weight from 70-lb. to 50-lb. to keep our postage the same.”

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