The agreement, which still has to be approved by the Postal Rate Commission, seeks to short-circuit the lengthy rate-hike appeal process.
Avoiding bigger boost
Marketing groups said that although the agreement allowed the rate hike to take effect two months earlier than it normally would in the review process, the action also avoids the possibility of the Postal Service reopening the rate issue to seek an even bigger boost.
"We understand that the economic situation has changed, and we know they need additional money," said Jerry Cerasale, senior vice president of the Direct Marketing Association. "We feared that if we didn't settle, instead of facing an 8% hike in June, we could be facing a 12% to 15% rate hike in September."
Jim Cregan, executive vice president of the Magazine Publishers of America, said mailers were left with little choice.
The bottom line
"We think in light of all the circumstances, it is fair and justifiable," he said. "It was pretty clear that the Postal Service intended to update its data [if mailers didn't agree] and the result would not have been good for us or any other mailing organization. The bottom line is we would have gone up another 5% or 10%."
At a Sept. 11 Postal Service Board of Governors meeting that had to be adjourned because of the terror attacks in New York and Washington, the Postal Service announced it was seeking a 3 cent hike in the price of a first-class letter to 37 cents.
Marketers and publishers were suddenly faced with a rate increase for the third time in little more than 18 months that would average about 8.7%.
The plan called for publishers to pay 10% more, and mailers of so-called standard mail to pay 7.3% more.
Terror and anthrax
Marketers weren't happy and had initially planned to fight the increase. Following the Sept. 11 attack and the subsequent anthrax scares, they became more fearful that the open rate case would become a vehicle for the Postal Service to immediately seek recovery of some of its revenue losses.
Shortly after Christmas, Postmaster General John E. Potter proposed a settlement plan that offered a rate increase to take effect in early June, but subsequently agreed to delay it to the end of June. The Postal Service has asked mailers who had been fighting its rate hike to agree by tomorrow to the settlement.
It wasn't immediately clear if any large mailers or consumers groups would oppose the settlement.
A spokesman for the Postal Rate Commission said it would accept comment on the proposed settlement through Jan. 18