The U.S. Postal Service may ask for a 7 percent to 8 percent rate increase for catalogers this November when the agency files for a rate increase before the Postal Rate Commission, industry sources said last week.
While no specifics have been announced by the USPS, insiders said that the agency had examined some expense numbers and found that Standard A, in general, is not a growing area for the USPS, and the culprit appears to be flats, or catalog-sized mail.
The USPS came up with this increase — which is higher than the 6 percent to 7 percent increase that some catalogers saw last year and significantly higher than the rate of inflation — because it's not achieving the automation efficiencies that it should be, after spending money installing new flat sorters.
Insiders also said the increase is designed to close the gap between the cost coverage for First-Class and Standard-A mailers. The USPS is calling for a 3 percent increase for First-Class mail. Rates will probably rise as a result of the case in January, 2001.
Direct marketers, not surprisingly, are concerned.
“I find it fascinating that the class of mail where the postal service is losing the most business from [as a result of the Internet] is the one where they have a 3 percent increase,” said Dan Minnick, director of postal and industry services at Experian, Schaumburg, IL. “But the class of mail that doesn't have a strong, legitimate alternative, that's the one where they have a 7 percent or 8 percent increase. This will be the second case in a row, then, where First-Class has only had a 3 percent increase and [Standard A] has a 6 percent or 7 percent increase.”
