Will reform let USPS charge by season, day?

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NEW YORK - The Direct Marketing Association thinks the recently signed postal reform law lets the U.S. Postal Service charge different rates in the summer and, potentially, even different rates by days of the week.

This statement came from Jerry Cerasale, DMA senior vice president of government affairs, who spoke at the Direct Marketing Club of New York's February luncheon at the Yale Club.

"Monday is the busiest day, so you might pay more," he said. "Tuesday, on the other hand, may have the least amount of mail volume, so maybe you pay less if you have delivery on Tuesday. Those are the kinds of things we think will give the postal service [the chance] to hold off on costs and remain competitive, and we really hope that happens."

Though the law may help the USPS and direct marketers stay competitive, it will not affect the current rate case.

"The law does not stop the current rate case," Mr. Cerasale said. "It is going forward."

He spoke on a panel of DMA executives that included Terri L. Bartlett, president of the Direct Marketing Educational Foundation; Patricia Kachura, senior vice president of ethics and consumer affairs; and Ramesh A. Laksmi-Ratan, executive vice president and chief operating officer.

The USPS filed May 3 for an average 8.5 percent rate increase. Mr. Cerasale said the Postal Regulatory Commission is to make a recommendation to the USPS Board of Governors on the case by Feb. 23. 

New rates likely would take effect May 6, he said.

"That's not set in stone," he said. "But I would plan on that date."

In addition, mailers should not expect the PRC to make major changes to the case that was filed by the USPS, he said.

"I think we are looking at the average 8 percent to 8.5 percent rate increase, with flat-shaped mail getting a larger increase than letter-shaped mail," he said. And mailers of samples - non-flat machinable parcels - as well as under-one-pound parcels will have much higher increases, he said.

Mr. Cerasale said that another rate case still could be filed under the old law, if filed by Dec. 19. In addition, he said that by June 19, the PRC has to come out with regulations to implement this new law and the rate-setting portion of the law.

Mr. Cerasale said that for non-competitive mail classes, such as First Class or Standard mail, the rate increase on average cannot exceed the rate of inflation, and annual increases are permitted.

"That does not mean every rate will go up the rate of inflation, and it could mean that someone will get a double inflation rate and others will not get one at all," he said. "I don't think it will be that drastic, but it gives the USPS the opportunity to have some flexibility and without going to the rate commission to hold down 
rates at the rate on inflation."

For competitive mail classes, such as Parcel Post, Priority Mail and Express Mail, the USPS may charge market-based rates with a requirement that rates charged cannot be below cost.

"I think you are going to start to see some creative thoughts coming from the USPS in trying to stay competitive in this area," he said. "And even if you can use Parcel Post, it is something that will hold down the rates of the USPS' competitors, such as UPS and FedEx."

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