USPS Board Clears Several Rate Hikes

Direct Mailers Hope for Decrease in Proposed Rise

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WASHINGTON (AdAge.com) -- The Postal Service Board of Governors today approved a raft of rate hikes today, but gave direct-mail catalogers a glimmer of hope that a proposed 41% hike could be eased.
Under the latest price hike, first-class stamps go to 41 cents from 39 cents.
Under the latest price hike, first-class stamps go to 41 cents from 39 cents.


Delayed increase
Saying it was upset by the catalog increase -- technically an increase for "standard mail" category -- the board approved that part of the rate hike under protest and asked the Postal Regulatory Commission to immediately re-examine it and two others. (Rejecting the rates outright would have entailed starting the 10-month process over.)

The board also delayed the rate hike for magazines and newspapers, which will now take effect July 15. Other rate increases take effect May 14.

New first-class rate: 41 cents
The Postal Regulatory Commission on March 3 approved a number of rate increases including raising a first-class stamp to 41 cents from 39 cents, a 5.1% hike.

The commission, however, surprised marketers and the Postal Service by reconfiguring the increase and hiking the rates used by catalogers by 41%. The U.S. Postal Service had not asked for or proposed such an increase.

Catalogers have argued that such a steep last-minute increase would hurt them but hurt the Postal Service more. They said with budgets developed well in advance, their only choice was mailing fewer catalogs and that, long term, the hike would further fuel shifts to the web.

'Bolt from the blue'
"We had been expecting an 8% increase," said George Ittner, president of The Territory Ahead, an adventure-travel-clothing marketer, and a member of the board of the Direct Marking Association. He called the rate hike a 'bolt from the blue."

"When you have a jolt like this you can't offset it by changing paper weights or trimming the size," he said. "You have to take other actions and the saddest part is this winds up damaging the Postal Service with a predictable spiraling down of circulation."

The Direct Marketing Association voiced a similar concern.

Board says hike too high
The Board of Governors today in a statement said it too was worried that the hike was too high, creating a risk that it might affect mail volume significantly.

"The governors are concerned about the effect that steep increases would have on the vitality of the catalog industry," said the statement. "The long-term interests of the Postal Service and its customers are served by a healthy catalog industry that creates interest in the mail and contributes to the institutional costs of the Postal Service."
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