The Demise of Direct Mail? PRC Approves 4.3% Exigent Increase

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The Demise of Direct Mail? PRC Approves 4.3% Exigent Increase
The Demise of Direct Mail? PRC Approves 4.3% Exigent Increase

As business mailers were shutting down the office lights and heading out for the Christmas holiday on December 24, the Postal Regulatory Commission (PRC) played Bad Santa in the eyes of those mailers, handing down a decision approving the U.S. Postal Service's full 4.3% request for an exigent rate hike on Standard Mail. Come January 28 marketers and catalogers who depend on the mail to deliver their appeals to consumers will be paying 5.9% more for postage with the CPI-based increase of 1.6% added in.

Mailers, who had hopes that the PRC might approve a modified exigent increase of under 2%, expressed major disappointment. A coalition of mailers that argued before the PRC that the USPS's use of the Great Recession as the exceptional circumstance for exigency was without merit called the PRC's action an “unmitigated disaster.”

The only saving grace of the PRC's decision is that it limited the rate increase to two years, after which it determined that losses due to the recession should be fully recovered. The decision was reached on a 2-1 vote of commissioners, with PRC Vice Chairman Robert Taub dissenting.

“The PRC is the Grinch this Christmas,” said Jerry Cerasale, outgoing SVP of government affairs of the Direct Marketing Association and an ex-PRC staffer. “At least they said that this outrageous postage increase will be phased out. Sadly, they Commission did not set a date for the phase-out.”

In a statement released after the decision was announced on Christmas Eve, the mailers coalition said that “generations of customers will pay for an undeserved postage rate increase that is triple the inflation rate. Worse, this rate increase does not fix what is wrong with the Postal Service, will further depress mail volume, and will worsen the Postal Service's financial woes.”

In letter to members of the American Catalog Mailers Association, a coalition member, President and Executive Director Hamilton Davison expressed frustration over the PRC's move. “Despite an all-out mailing industry full court press to convince the Postal Regulatory Commission the USPS's request for an exigent rate increase was ill-conceived and failed to demonstrate true exigency, the PRC approved the full 4.3% increase,” Davison wrote in an email. Other members of the coalition include the Direct Marketing Association, Association for Postal Commerce, Quad/Graphics, and R.R. Donnelley.

In its comments to the PRC last month the coalition argued that digital mail alternatives such as email and not the recession were the chief reasons behind the Postal Service's huge decline in mail volume. As a competitive business situation, digital alternatives would not meet the requirements of an exceptional circumstance for exigency, the group argued.

The only other time the Postal Service requested an exigent increase, one for a 5.6% hike in 2010, the PRC shot down the appeal, saying the stated exception circumstance was not valid. That circumstance? The Great Recession.

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