Worries Over Rate Caser, Software Updates

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LAS VEGAS -- While mailers came to last week's National Postal Forum to network with colleagues, attend sessions and catch up on industry gossip, the underlying mood here was one of anxiety over the rate case.


Hundreds of attendees waited on line to attend the "Rate Case Update & Implementation" seminar at the Las Vegas Convention Center, and many were turned away.


The Postal Rate Commission (PRC) must decide on the case by May 10. Then mailers must wait for the U.S. Postal Service's Board of Governors to make its decision in June.


And the governors have several options: They can either throw the case back to the PRC for reconsideration; they can reject it all together; or they can implement it in July, or delay it until October or even January.


Many mailers believed this "wait-and-see attitude" could limit their ability to react to a possible postal rate increase.


Controversy surrounds rate increases this year because of the USPS' healthy financial status. According to information released last week, the USPS reported a 3.3 percent increase in gross income, from $22.9 billion to $23.7 billion, between Sept. 3 and Jan. 30.


But spokesman Grady Foster said the USPS still expects to see a deficit by the end of the year


Mailers also are concerned over how long it would take their vendors to change their mailing software to meet the USPS' requirements.


"We are worried about the programming problems it is going to create for us and for our software vendors," said Steven Strickbine, supervisor of remittance processing/office services for Phillips 66, Bartlesville, OK. The division of Phillips Petroleum handles credit-card marketing and mailing.


"We won't be able to really prepare for these problems until the case is actually decided. It's very nerve-racking," he said.


Software vendors said they would like the increase delayed as long as possible to update the software in line with proposed changes to mail categories. For example, the postal service has proposed changing the rate structure of Standard B parcels, and rate incentives are being introduced for parcel presort and barcoding.


"If this were just a pure rate case, where rates were just changing, then there would be no problem," said Paul D. Greene, executive director of industry relations at Pitney Bowes Software Systems, Rockland, MA. "Because the new rates in this case affect sortation, we need a period of time to make sure we can offer our customers quality software for their needs and quality assurance."


Adding to mailers' anxiety are rumors about the possible implementation date.


"It gets to the point where you don't know whose version to believe," said David Jones, mailroom supervisor at Great American Life Insurance Co., Cincinnati. "It seems like the USPS' attitude is that the rate case will take place sooner rather than later, while the mailing services companies seem convinced that it will happen next year."


Some mailers said they may switch from the USPS because of the confusion and probable outcome of the rate case.


"We send out quite a bit of mailings per year through Priority Mail, and depending on what happens with that category in the rate case, we may or may not continue to use it," said Jerry English, vice president of mail-order operations at J. Crew, Lynchburg, VA. "We are preparing for anything and keeping our options open."


Other mailers are worried that the governors' rejection of the PRC's requests for additional financial data and more time may have negative effects on the outcome of the case -- especially since the two organizations historically have had an adversarial relationship.


"What the board of governors did was politically stupid," said Charles Howard, vice president of special projects and postal affairs at Harte-Hanks Direct Marketing, Glen Burnie, MD. "They polarized themselves from the PRC, which may cause the PRC to be particularly hard on certain parts of the case."


But Ken Hollies, an attorney for the USPS, said the governors were just doing their job.


"The request by chairman [Ed] Gleiman to basically extend the case is not something that in and of itself had a strong legal foundation," Hollies said. "It could well have been challenged, and who knows where that road would have taken us. It's the joint responsibility of the Postal Rate Commission and the postal service, both, to end up implementing rates that can be defended in any subsequent court suit. And almost invariably there is such follow-up litigation."
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