DMA, mailing group call for dismissal of possible postal rate increase

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Industry groups the Direct Marketing Association and the Affordable Mail Alliance called on the Postal Regulatory Commission July 26 to dismiss the US Postal Service's request to increase postal rates in 2011.

Jerry Cerasale, SVP of government affairs at the DMA, said exigent price increases should be reserved for situations such as major natural disasters or terrorist attacks, but not economic downturns. He added that if the USPS followed the cost-cutting examples of fellow shippers UPS and FedEx, it could significantly improve its financial position.

“If they would simply emulate their closest competitors, there would be no need for a price increase,” he said. “I think it's going to force their customers to look elsewhere, and once they're gone, the mail is not coming back.” 

Both UPS and FedEx enacted cost-cutting measures, including layoffs, in recent years to combat the recession.

The USPS unveiled details of its proposed “exigent price increase” July 6. Direct marketers, mailers and catalogers immediately vowed to fight the price changes.

Catalog mailers will see postage prices increase by 5.1% on average January 2, 2011, if the rate changes are approved. Other direct mailers would see price hikes of about 5%, although companies that mail Standard Mail Parcels (packages weighing less than one pound) would get hit with a 23.3% price increase. The First Class Stamp's price would go up 2 cents to 46 cents.

The Affordable Mail Alliance, formed by 700 organizations earlier this month in response to the rate increases, said in a statement that “the trend toward Internet communications away from mail has been taking place over the past 15 years, giving the USPS years to prepare for the decline in volume. It hasn't.”

It added that if the rate changes are approved, “American businesses will be spending more on postal services, [and] there will be less money for investment, payrolls and business growth.” A representative from the group could not be immediately reached for comment.

Sen. Susan Collins (R-ME), ranking member of the Senate Committee on Homeland Security and Governmental Affairs, said July 23 in a letter to the Coalition for a 21st Century Postal Service that “the exigent rate increase filing is not justified under the terms of the 2006 Postal Accountability and Enhancement Act.”

“Rather than help restore postal solvency, an exigent rate increase will worsen the decline in mail volume and revenues,” she said.

The USPS saw a net loss of $3.8 billion last year. It has also asked the PRC and Congress to roll back its home delivery requirement to five days per week.

Greg Frey, USPS PR representative for delivery, online services, post offices and retail, said, “We believe the standard [for an exigent increase] has been met.”

Joseph Corbett, CFO of the USPS, said in statement to the PRC earlier this month that the “severe and abrupt volume loss is anything but ordinary when compared to the long history of the US Postal Service and, before that, the Post Office Department.”

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