Catalogers decry rate case hike with letter-writing campaign

Share this article:

The catalog mailing community is still hoping for action by the U.S. 
Postal Service board of governors after it launched a letter-writing 
campaign last week lamenting the higher-than-expected rate increase 
for catalog mail.
While the Postal Regulatory Commission on Feb. 26 recommended an 
average 7.6 percent rate increase, catalogers or flats mailers were 
hit with 20 to 40 percent rate increases, which were also much higher 
than the USPS' average 12.5 percent hike in its proposal filed on May 
3, 2006. The mailing community had until March 8 to write, fax or e-
mail letters asking the postal governors to reject the PRC's specific 
recommendations for flat-shaped mail. And write they did.
"We have received letters from 150 to 200 different companies," said 
Stephanie Hendricks, spokeswoman for the Direct Marketing Association 
in Washington.
The DMA called on its members last week to protest the rates by 
faxing letters to James C. Miller III, the chairman of the USPS 
board, as well as to Dan G. Blair, chairman of the PRC and the DMA.
As of March 8, "We have received over 1,000 correspondences during 
the comment period," said David Partenheimer, a USPS spokesman. "Some 
are duplicates sent from multiple channels - letters, faxes and e-
mail. This number is typical for a rate case comment period."
One letter, by Garteh L. Geisler, CEO of AmeriMark Direct LLC, a 
catalog firm in Cleveland, OH, told Mr. Miller "these rates, as 
proposed by the PRC, are outrageous and irresponsible to the mailing 
community."
In the letter, he said that, as a result of the increase, his company 
will have to reduce its circulation by 20 to 30 percent when the 
rates go into effect.
"With this type of rate increase and a reduction in mailings, we will 
also be forced to [do] a reduction of employees in order to remain in 
business," he wrote. "Even worse, many catalogers that are currently 
marginal from a profit point of view will have to close their doors."
Mr. Geisler said the USPS will be negatively impacted by the loss of 
revenues in all classes of mail that stem from catalog mail, such as 
parcels and First-Class mail, which is used by consumers mailing 
orders to catalog companies.
The USPS Board of Governors could accept the PRC's decision and 
recommend it, reject it or make changes to it. Historically, the 
board has tended to accept the PRC's decisions, with occasional small 
changes.
The governors have not set a date yet for voting on the decision. 
Insiders said it could take place midweek.
Postmaster General John E. Potter told USPS customers last year that 
they should prepare for a possible May 6 rate change date.
Jerry Cerasale, the DMA's senior vice president for government 
affairs, said last week "we are certain that the PRC is moving much 
too far and much too fast with rates that will be ruinous for many 
postal customers. Any responsible policy should allow for a gradual 
adjustment."
Mr. Cerasale said that since the early 1990s, when the USPS 
originally announced its intention to adapt mailing rates to reflect 
the cost differential between letter-size and flat-size mailings, the 
USPS has been making those changes gradually. This is to avoid 
placing an undue burden on the mailing community.
"Now the PRC seems to be abandoning that approach just as the postal 
service is investing more than $874 million to make its flats-sorting 
system more cost effective," he said.
The PRC said its decision was based purely on cost attribution.
"The difference was that there was a trade-off between flat mail and 
letter mail in terms of processing costs," said Steve Sharfman, 
general counsel for the PRC. "And the evidence, in the view of the 
comission, showed that letters were paying too much relative to their 
costs and flats were paying too little relative to their costs. So, 
the adjustment was made to lower the rates for letters [so] ... the 
rates for flats went up as the rates for letters went down."
According to the USPS, more than 53 billion catalog or flats were 
mailed in 2006, accounting for 8 percent of all First Class mail, 17 
percent of Periodicals and 75 percent of Standard Mail.
Donald R. Libey, veteran direct marketer and president of Libey Inc., 
Des Moines, IA, wrote in an article on http://www.dmnews.com/ last week that 
the rate increase would result in a cascade of ad dollar shifts to 
online.
"Catalogs, which represent 80 percent of our industry revenues, will 
dry up like old newsprint," Mr. Libey said.
"Make no mistake about it: The catalog still drives 70 to 80 percent 
of the online orders," he said. "The catalog is still the most 
powerful engine of new-customer acquisition. The catalog remains the 
best economic medium for prospecting and customer retention. Without 
the catalog, the multichannel retail industry is in trouble."

Share this article:
You must be a registered member of Direct Marketing News to post a comment.

Sign up to our newsletters

Follow us on Twitter @dmnews

Latest Jobs:

More in Direct Mail

Melissa Goes to Canada

Melissa Goes to Canada

Melissa Data adds Canadian change of address processing to its cloud-based NCOA service.

Delivered: University of Chicago Mailers

Delivered: University of Chicago Mailers

What's in our mailbox this month: University of Chicago mailers. See which ones make the grade—and which ones, not so much.

Ricoh Strikes a Blow for Multichannel on a Small Scale

Ricoh Strikes a Blow for Multichannel on a ...

The company introduces a creative service to help print shops augment direct mail with email and pURL landing pages.