While it may be cold comfort to the mailers already hurting from the impact of the last increase, the postal rate hike coming in two months is going to be fairly tame.
In its first increase under the new postal reform rules, the U.S. Postal Service announced on Feb. 11 that it will raise its rates by low single-digit percentages on May 12. Price increases for Standard Mail flats — the category affecting most catalogers — would stay below the consumer price index (CPI).
According to USPS spokesman David Partenheimer, the increase for Standard Mail flats as a whole is about 1.67%. But for the non-carrier route flats — the category that experienced the largest increase last year — the hike is 0.86%. After rates went up last May, many catalogers had to swallow increases from 20% to 40%.
For Hamilton Davison, executive director of the American Catalog Mailers Association (ACMA), which formed less than a year ago, the lower increase “is an important first step in what I hope is a significant series of improvements to the rate structure and totality of how mail is managed.”
Joe Schick, director of postal affairs for Sussex, WI-based printer Quad/Graphics, says the USPS displayed good faith, adhering to the criteria established in the Postal Reform law passed at the end of 2006.
“In our discussions with the Postal Service since last year’s rate increase, there had to be something done to help catalogers,” he says. “The indications were they would definitely head in that direction. The only question was to what extent.”
While he notes that “the push here in the right direction is a positive,” Schick says he’s a little disappointed the USPS didn’t go a bit further in giving catalogers a rate break. “Standard Mail is the only place they’re seeing growth now, and they have to concentrate on that — whether it’s catalogs or direct mail.”
Chris Bradley, president of Portland, ME-based bedding merchant Cuddledown, notes that the new rates for catalogers reflect a few things that have happened since the big rate increase of 2007.
“One thing is the amount of work that catalogers have done in the past year to educate the postal community on how rate-sensitive catalog mailing volumes really are, as well as the value to consumers and the economy of a robust catalog industry,” Bradley says.
The other factor is the recent decrease in catalog mail volume, which has fallen 13% below the level of this time last year. “The new rates are certainly a little lower than the CPI average — and that is a good thing — but our industry is still trying to cope with both last year’s massive increase and the current weak economy,” Bradley says. “I think we will continue to see decreases in mail volume.”
Indeed, “any increase that affects us, however small, is not good,” says Laura McManus, president of Baltimore-based upscale food cataloger Mackenzie Ltd.
“Postage is obviously a huge expense and at this point we are considering mailing fewer catalogs this year — which will be a first in our history,” McManus says. Unexpected increases of any kind “will not make the situation better. At some point we raise prices to help with the extra burden, and the consumer is the one who is hurt.”
What’s more, she says, “considering that the paper market is also haywire doesn’t bode well for this year in terms of catalog mailings.”