Mailing industry urges "en masse" response to halt increases in catalog rate

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A list industry veteran is calling for action over the catalog rate increases recommended late last month by the Postal Regulatory Commission.

In an urgent message sent March 5 to all MeritDirect customers, Ralph Drybrough, CEO of MeritDirect List Brokerage Services, White Plains, NY, said that the PRC-proposed flat rates would increase rates by about 20 percent, rather than the 9 to 11 percent increase proposed by the U.S. Postal Service.

"These new rates will be effective on May 6," Mr. Drybrough said. "NEMOA [New England Mail Order Association] and PostCom [Association of Postal Commerce] believe the only effective way to reach the USPS now is for catalogers to contact the USPS directly. Per NEMOA and PostCom: 'It is critical that catalogers act en masse and quickly.'"

Both PostCom and NEMOA sent out similar messages to their members last week. The Direct Marketing Association also came out with a statement late on Friday that said after a thorough review of the 700-page document, it is expressing deep disappointment over recommendations that would increase postage costs for catalog mailings by as much as 40 percent.

"This is a case where the devil really did prove to be in the details," said DMA President & CEO John A. Greco Jr. in the statement. "In our analysis of these recommendations, it has become clear that, in addition to the increased burden for many nonprofit mailings, the outrageous rate increases proposed for many types of flat mailings are far in excess of what had been expected by the mailing community and are certain to ultimately cause a serious decline in mail volumes and a negative ripple effect for consumers, businesses, and the economy.

"The reduction in mail volume alone might well be enough to send the Postal Service into a death spiral of reduced revenues, halts to infrastructure improvements and increases in postage rates for all classes of mail," he said.

Mr. Greco also said that every catalog mailer should let the USPS and its governors know that the proposed rates for flats are completely unacceptable to the mailing community and will have a negative effect not only on mail volumes but also on the ability of catalog mailers to communicate with their customers and conduct their business.

"The long-term results of these ill-advised recommendations could be detrimental to many American businesses and ultimately to our economy as a whole," he said.

In his message, Mr. Drybrough said MeritDirect supports this "en masse" action and encouraged its clients to:

1. Find the person at the highest level in your company willing to work with you on this grassroots effort.

2. Prepare a letter for e-mail and fax that includes the name of your company and the following information:

-- How much you paid in 2006 for postage and, if possible, what percent postage is of your total catalog cost.

-- The financial impact this rate increase will have on your company if the rate for flats moves from 10 to 12 percent to 20 to 24 percent.

-- How an increase like this has a direct impact on how many catalogs or direct mail pieces you can circulate. This is critical because it will illustrate to the USPS that if the increases are too high, the overall circulated pieces will drop to help assuage the increase.

3. E-mail and fax your letter to Postal Chairman Miller's secretary at wendy.a.hocking@usps.gov and to Postmaster General Jack Potter at jpotter@usps.gov no later than March 8. The subject line should include the name of your company and that the e-mail is in response to the PRC postal rate recommendations.

Mr. Drybough also suggested faxing letters directly to the chairman of the board of governors at The Honorable James C. Miller III, Chairman, Board of Governors, U.S. Postal Service, 475 L'Enfant Plaza SW, Room 10300, Washington, DC 20260-1000. Phone: 202-268-4800; Fax: 202-268-5472.

The DMA also said that copies should be faxed both to The Honorable Dan G. Blair, Chairman, Postal Regulatory Commission at 202-789-6886 and to Stephanie Hendricks, Director, Public Affairs, Direct Marketing Association at 202-955-0085.

"Please act on this now," Mr. Drybrough said. "Once the board of governors makes its decision, there is no appeal process."

In his e-mail, Mr. Drybrough offered sample wording for a letter and told readers to personalize it any way they could to make it sound less like form letter. Following is what he suggested:

Honorable Chairman Miller,

I am contacting you to outline how the new Standard Mail rates recommended by the Postal Regulatory Commission will hurt both my company and the USPS.

The recommended rates are almost double what we expected, and the new increase will require that we re-examine our catalog circulation with the objective of cutting postage costs. I expect that these new rates will cause us to cut our budgeted circulation, and the net effect will be less revenue for the Postal Service. I am asking that you consider the impact of these rates on catalog mail volume and reduce the increase on Standard Mail Flats.

We mailed _________ catalogs in 2006 and paid $_______ in postage. We expected to increase our circulation by _____ percent in 2007. Our 2007 postage budget is based on the Standard Mail rates proposed in May 2006, and this was a _____ percent (you can use whatever percentage you planned on - should be around 10 percent) increase over current rates. Our budget calls for postage to increase $______ this year. Under the rates proposed by the PRC our postage is now expected to increase ____ percent (you can put in the percentage that your printer will help you calculate, or you can look at the new rate increases in the press and estimate; the percentage increase should be somewhere around 20 percent) so our postage would increase by $_______ in 2007. The proposed PRC rates are such a large and unexpected increase that we will be forced to reexamine our circulation, and I expect that some of our marginally profitable catalogs will now fall below breakeven. As a rough estimate at this early date, I expect to cut our budgeted circulation by ___ percent (make your best guess here) if these new rates are implemented.

The rates proposed by the PRC are more than five times the rate of inflation, about twice the rates proposed by the USPS, and are being proposed well after our budget has been set. They will make some of our planned circulation unprofitable, so we have no choice but to cut out those unprofitable catalogs.

The net effect will be a loss of volume for the USPS, and the loss of volume will only grow worse as the full effects of the rates are felt in 2008 and beyond, along with any new rate increases. I expect the proposed rates to reduce mailing volume throughout the catalog industry, resulting in less prospecting names for 2008 and the risk of a downward spiral in Standard Mail volume for the USPS. In addition to negatively impacting our catalog circulation, this postal increase will significantly affect our company's profitability and future employment levels.

It is critical that you take action on this matter and reduce the increase on Standard Mail Flats.

Sincerely,

___________________________

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