Given the toll that the economy is taking on mailers, some catalogers might have expected the U.S. Postal Service to reconsider its proposed rate increase. The USPS Board of Governors (BOG) had announced the imminent filing on Sept. 11, only moments before that day’s terrorist attacks, which worsened already disappointing catalog sales.
No such luck. On Sept. 24, the USPS formally filed for the rate increase with the Postal Rate Commission (PRC). “Our financial situation isn’t good [either],” USPS chief marketing officer Anita Bizzotto said the day of the filing. “We think it’s important to correct that situation as we go forward. We need to continue to make sure we have enough money to run the Postal Service, and unfortunately, the way we do that is to raise rates.” On Sept. 21, the USPS reported that its fiscal year 2002, ending next September, would be $1.35 billion in the red.
“In an economy that has been struggling all year and is now under additional pressure from the Sept. 11 tragedy,” retorts Direct Marketing Association president/CEO Bob Wientzen, “it’s unfathomable that the Postal Service would ask consumers and businesses to sustain yet another postage increase. Such new increases are far in excess of the rate of inflation and will be a major drain on our softening economy.”
Making matters potentially worse for catalogers: The Postal Service has requested that the PRC give the rate case “expedited consideration.” Ordinarily, rate cases take 10 months to complete. But if the PRC agrees to expedite the case — something it did only once, in 1994 — the USPS could of course implement the rates sooner than previously anticipated. Under nonexpedited circumstances, the rate hike would not go into effect until August 2002 at the earliest. Bizzotto is unsure how much sooner the USPS could implement new rates if the rate case gets expedited treatment.
But that’s not the reason the agency is seeking expedited consideration, says Dan Foucheaux, the USPS’s chief counsel, rates and classifications.“The idea is to give the BOG maximum theoretical flexibility,” he says. “Nobody has any implementation date in mind now. It depends on how the BOG determine the financial situation. They want as much lead time as possible.”
Select Proposed Postage Increases
|Rate||Proposed Changes %|
|Standard Mail||7.3% (overall average)|
|Commercial enhanced carrier route (ECR)||6.2%|
|Pound rate ECR||-6.3%|
|Nonprofit pound rate ECR||no change|
|Parcel Post||10.0% (overall average)|
|Inter/intra bulk mail center rates||17.6%|
|2 lbs.-5 lbs.||shifts to zone-based pricing, resulting in decreases for parcels traveling shorter distances and increases for items shipped longer distances|