The catalog mailing community is still hoping for action by the U.S.
Postal Service board of governors after it launched a letter-writing
campaign last week lamenting the higher-than-expected rate increase
for catalog mail.
While the Postal Regulatory Commission on Feb. 26 recommended an
average 7.6 percent rate increase, catalogers or flats mailers were
hit with 20 to 40 percent rate increases, which were also much higher
than the USPS’ average 12.5 percent hike in its proposal filed on May
3, 2006. The mailing community had until March 8 to write, fax or e-
mail letters asking the postal governors to reject the PRC’s specific
recommendations for flat-shaped mail. And write they did.
“We have received letters from 150 to 200 different companies,” said
Stephanie Hendricks, spokeswoman for the Direct Marketing Association
in Washington.
The DMA called on its members last week to protest the rates by
faxing letters to James C. Miller III, the chairman of the USPS
board, as well as to Dan G. Blair, chairman of the PRC and the DMA.
As of March 8, “We have received over 1,000 correspondences during
the comment period,” said David Partenheimer, a USPS spokesman. “Some
are duplicates sent from multiple channels – letters, faxes and e-
mail. This number is typical for a rate case comment period.”
One letter, by Garteh L. Geisler, CEO of AmeriMark Direct LLC, a
catalog firm in Cleveland, OH, told Mr. Miller “these rates, as
proposed by the PRC, are outrageous and irresponsible to the mailing
community.”
In the letter, he said that, as a result of the increase, his company
will have to reduce its circulation by 20 to 30 percent when the
rates go into effect.
“With this type of rate increase and a reduction in mailings, we will
also be forced to [do] a reduction of employees in order to remain in
business,” he wrote. “Even worse, many catalogers that are currently
marginal from a profit point of view will have to close their doors.”
Mr. Geisler said the USPS will be negatively impacted by the loss of
revenues in all classes of mail that stem from catalog mail, such as
parcels and First-Class mail, which is used by consumers mailing
orders to catalog companies.
The USPS Board of Governors could accept the PRC’s decision and
recommend it, reject it or make changes to it. Historically, the
board has tended to accept the PRC’s decisions, with occasional small
changes.
The governors have not set a date yet for voting on the decision.
Insiders said it could take place midweek.
Postmaster General John E. Potter told USPS customers last year that
they should prepare for a possible May 6 rate change date.
Jerry Cerasale, the DMA’s senior vice president for government
affairs, said last week “we are certain that the PRC is moving much
too far and much too fast with rates that will be ruinous for many
postal customers. Any responsible policy should allow for a gradual
adjustment.”
Mr. Cerasale said that since the early 1990s, when the USPS
originally announced its intention to adapt mailing rates to reflect
the cost differential between letter-size and flat-size mailings, the
USPS has been making those changes gradually. This is to avoid
placing an undue burden on the mailing community.
“Now the PRC seems to be abandoning that approach just as the postal
service is investing more than $874 million to make its flats-sorting
system more cost effective,” he said.
The PRC said its decision was based purely on cost attribution.
“The difference was that there was a trade-off between flat mail and
letter mail in terms of processing costs,” said Steve Sharfman,
general counsel for the PRC. “And the evidence, in the view of the
comission, showed that letters were paying too much relative to their
costs and flats were paying too little relative to their costs. So,
the adjustment was made to lower the rates for letters [so] … the
rates for flats went up as the rates for letters went down.”
According to the USPS, more than 53 billion catalog or flats were
mailed in 2006, accounting for 8 percent of all First Class mail, 17
percent of Periodicals and 75 percent of Standard Mail.
Donald R. Libey, veteran direct marketer and president of Libey Inc.,
Des Moines, IA, wrote in an article on http://www.dmnews.com/ last week that
the rate increase would result in a cascade of ad dollar shifts to
online.
“Catalogs, which represent 80 percent of our industry revenues, will
dry up like old newsprint,” Mr. Libey said.
“Make no mistake about it: The catalog still drives 70 to 80 percent
of the online orders,” he said. “The catalog is still the most
powerful engine of new-customer acquisition. The catalog remains the
best economic medium for prospecting and customer retention. Without
the catalog, the multichannel retail industry is in trouble.”
Catalogers decry rate case hike with letter-writing campaign
