Ever since the passage of the Postal Accountability and Enhancement Act in 2006, direct mailers have become accustomed to planning for a January hike in Standard Mail rates in line with the Consumer Price Index for urban areas. Last Christmas Eve, however, the Postal Regulatory Commission (PRC) interrupted mailers’ caroling with the approval of a 4.3% exigent increase, sending their accountants back to Scrooge’s Counting House to pare down mailing schedules for 2014.
Now mailers’ 2015 plans have been visited by another surprise, one that actually may be a gift. In October, with suits over the exigency decision from both mailers and the Postal Service still pending in the D.C. Court of Appeals, and with postal reform bills languishing in Congress, Postmaster General Pat Donahoe announced that the postal board would ask for no increase this January. The earliest an increase could go into effect would be March or April 2015.
Holiday cheer?
Will mailers reap a windfall following their worst Christmas ever? One who thinks Christmas cheer will still be in short supply is Quad/Graphics Director of Postal Affairs Joe Schick. “I don’t know if it changes anything. There’s still uncertainty in the air about what [mailers] should plan for 2015,” he says. “I haven’t heard anyone say, ‘Well, maybe we’ll mail more.’ Unfortunately, it just lends itself to more uncertainty.”
But Peggy Hudson, SVP of government affairs for the Direct Marketing Association, is of the opinion that at least some mailers will reap benefits. “I would hope that they look at this as a windfall,” she says. “Companies can invest that deferred postage to test new approaches, or to do some prospecting for new customers.”
Hamilton Davison, president and executive director of the American Catalog Mailers Association, takes an accountant’s view of the rate deferral, even if it only lasts the first quarter. “If the rate increase was going to be 2 percent, that represents one half of 1 percent of annual postage increase saved, so that’s pretty cool,” he says. “All this is good news for mailers. The fact is that we had an effect on what the Postal Service does with rates.”
USPS’s filing with the Court of Appeals holds that it should be entitled to bake the exigent increase into its rate base; the mailers’ petition asks for the increase to be expunged. Oral arguments were presented in the case in September, and a decision is due in early December. Early handicapping sees the court remanding the case back to the PRC with instructions.
“During the oral testimony, it was not clear whether the court would find in either party’s favor,” Davison says. “If anything, the court thought the PRC was being too liberal in saying that the increase should stay in effect for only another year, but they clearly were not for making [exigency] unlimited.”
Postal industry players saw little chance for passage of postal reform in the near future, especially if the court’s ultimate decision appeases mailers and the Postal Service enough to defer further litigation. “It’s possible,” Davison says, “that we could see a period of rate stabilization.”
