Chicago DM Days crowd reacts to rising postal rates

CHICAGO – Mike Plunkett must have anticipated some backlash over the U.S. Postal Service’s decision to raise rates starting May 14. What the USPS vice president of pricing and classification didn’t expect – and nor did most attendees sitting in on his session on the postal rate case at the Chicago Direct Marketing Days & Expo – was the visceral reaction to the development.

One representative of a midsize lettershop in the Chicago area said her firm was “absolutely dead” in the past two months. The company’s clients have cut back on their direct mail plans, shocked by the postal rate increase.

“We laid off 25 people,” she told Mr. Plunkett and the audience in a Q&A session after the presentation at this Chicago Association of Direct Marketing event.

The woman declined to be identified for this article.

Some of her clients are at a standstill with their printing and mail plans, and others are switching to cheaper catalog formats such as Slim Jims.

Another delegate echoed her sentiment. He said his company printed 100 million pieces a month for clients. That is now down by half.

“We’ve been dead for the past couple of months,” he said.

Mr. Plunkett sympathized with these marketers.

“I don’t think the Postal Regulatory Commission understands customers’ businesses,” he said. “They’re really more cost driven.”

The PRC set the prices for the rate case, coming in for criticism from catalogers, publishers and nonprofits for the dramatic increases in postage costs. Even the USPS has had to appeal for changes to the new rate structure to avoid scaring off its mail customers.

In the audience was Marty Ochs, president of A.M. Mailing Services Inc., Edgerton, WI, an outspoken critic of the postal rate case.

“I predict in two years 20 to 25 percent of catalog reduction in page count,” he said.

The industry has spent tremendous amounts on new technology such as inkjet and Web presses, he said. But it’s a struggle since costs have been cut so much. He encouraged better scrutiny with lists, commingling and drop-shipping.

“We’ve got such a squeeze within the industry,” Mr. Ochs said. “We’ve done everything we can. We’re choking.”

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