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Exigency Extra

With the direct mail industry preparing to debate the United States Postal Service’s (USPS) Postal Board of Governors on Sept. 5 in a discussion about a potential exigent rate increase, we present considerations posed by parties that figure to be affected by such a move.

“If the USPS Board of Governors impose an above-CPI-cap exigency postage increase on catalog mailers, catalog mail volume will inevitably take a significant fall. In some cases, catalog volume could decline to post-2007 rate increase levels, and will be very hard for some companies to recover from. More than six years since the damaging 20%-plus postage increase imposed on catalog mail, this industry has still yet to recover; an exigency increase will only exacerbate the problem.” — American Catalog Mailers Association

“If no legislation passes and the USPS moves forward with an exigent request, one possible scenario that has been discussed would involve a total price increase of 6 to 9%, calculated as…

  • CPI  <= 2%:  estimated annual increase scheduled for late January 2014 implementation
  • An across-the-board 4% increase above the CPI increase: The $2.6B estimated savings the USPS was not able to realize due to delaying implementation of five-day mail delivery.
  • Another 2 to 3% increase for the “underwater” products. Underwater products are defined as market dominant product categories that are not covering their attributable costs. This includes Standard Flats, excluding saturation, high-density plus, high density, or enhanced carrier route and all of Periodicals.”   — RR Donnelley

“With the availability of highly effective and efficient marketing alternatives, any significant postage rate increase would change the ROI calculus by companies in comparing alternatives. That shifting ROI, in turn, would threaten the sustainability of our existing strategies and compel an industry-wide shift of investment of communication and advertising dollars from mail to those alternative channels. This not only raises very serious questions about the accuracy of any claim that mail is price insensitive, but would significantly slow or stall any Postal Service recovery.”  — The Affordable Mail Alliance

“Hopefully [mailers] can bring some pressure to change Congress’s sidestepping  and pass realistic reform for a new USPS for the 21st Century. We have already lost a significant amount direct mail business  to email and social media channels because of CPMs and time to market. And Every Door Direct Mail local mailers will not make that up!”  — A USPS regional Mail Solutions Specialist

“Attempting to address some of the service’s inherent problems—notably an oversized and underutilized infrastructure—by imposing a rate increase on a product [periodicals] postmaster generals have called ‘the anchor of the mailbox’ [as] both unwise and unlawful. In addition, MPA urges the Board of Governors to be mindful of the Postal Regulatory Commission’s position that attempting to resolve issues unrelated to exigent circumstances, such as the cost coverage of periodicals mail, through an exigent filing conflicts with the law.  — MPA , The Association of Magazine Media

“The increase, made possible by a 2006 law that gives the Postal Service the option to raise rates in case of extreme circumstances like a terrorist attack, could be as high as 10% across the board. It couldn’t come at a worse time for the media and marketing industries that depend on mail service.”  — Rural Info News

“And now let’s look at the reasons why the USPS should not play the exigency card. The primary reason is that the result of higher-than-CPI increases will be an immediate loss of volume and movement to other marketing channels.  From a political standpoint, if Congress were to see the USPS raise prices, it would assume more revenue and reduce the need to act quickly in developing and passing postal reform legislation. Congress would kick the can once again since the crisis would not be imminent in its mind, defeating the short- and long-term strategy the Postmaster General has laid out.” — Joe Schick, director of postal affairs, Quad/Graphics

“In July 2010 the Postal Service filed a request with the PRC seeking an exigent price increase as allowed by P.L. 109-435. This request for a price increase for Mailing Services that exceeded the increases tied to the Consumer Price Index was denied by the PRC. On October 22, 2010 the Postal Service filed a petition in the U.S. Court of Appeals for the District of Columbia Circuit seeking a review of the PRC’s interpretation of the law that governs how prices can be set under extraordinary and exceptional circumstances. The Postal Service believes that the PRC misread the statute and applied an incorrect standard in evaluating the request for an exigent price increase.” — USPS, in a 2010 press release

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