Mailers in Talks with Postal Unions to Forestall Rate Increase

During their conference call last week, members of the U.S. Postal Service Board of Governors brought up the issue of an exigent rate increase, but chose to table it until their meeting in Kansas City on September 24-25. It was a small, but important, victory for the Affordable Mail Alliance (AMA), which had sent a letter to the Board asking it to consider the effect a rate hike might have on 8 million private sector jobs and annual related revenues of $1.3 trillion.

“The governors gave us two weeks to see if mailers and postal employees could rally to push for postal reform,” says Jerry Cerasale, SVP of government affairs at the Direct Marketing Association, a member of the AMA. “So we have been talking with all four unions and we hope that, if they see some movement in the right direction, the governors will ask for an increase based on the Consumer Price Index and not file for an exigent increase.”

The unions in question, which have been critical of consolidating postal sorting facilities and closing post offices, are the American Postal Workers Union, the National Association of Letter Carriers, the National Postal Mail Handlers Union, and the National Letter Carriers Association.

Meanwhile, the American Catalog Mailers Association (ACMA), another AMA affiliate, is rallying concerned mailers for a Lobby Day Fly-In to Washington on October 9-10 to visit key members of Congress to show support for postal reform. “This is very important, so we are inviting all mailers, not just our members, to join us and we’re not charging a fee,” says Hamilton Davison, president and executive director of ACMA. Participants must pay their own travel costs, but the association is picking up the tab for administrative costs involved in setting up the sit-downs with legislators.

“Mailers should understand they have to keep pressing the issue with Congressional reform because it has to get done,” says Quad Graphics Director of Postal Affairs Joe Schick. “We’ve thankfully gotten some response from the mailing industry, but we could use more, especially from smaller, individual mailers who will be greatly affected by an increase.”

Schick says that mailers apply a simple one-to-one ratio to decrease mailings in relation to rate increases. Using that formula, had the USPS’s last exigent increase request of 5.6% in 2010 been approved, it would have resulted more than a 5% decrease in business mail volume. This is one of the issues that’s forged common ground among mailers and postal employees.

“We strongly encourage Congress to let the Postmaster General implement his plan by passing a reform package,” says John Haydock, president of Plow & Hearth, a retailer with six brands, four of which are supported by catalogs. “The postal Board’s imposing a significant rate increase now would only complicate the situation, be counterproductive, and result in lower volume.”

Plow & Hearth, whose other brands include Magic Cabin and Wind & Weather, is a data-driven business that uses financial models to determine the optimal mix of digital and direct mail marketing to support its goals. Over the past few years, Haydock says, it has reduced catalog circulation by 20%.

“For each additional point of a postal rate increase, we will lower our catalog circulation a certain amount and we will redirect some of those dollars to digital channels,” Haydock explains. “The math is actually quite simple.”

There is a feeling growing among mailers that September 25 in Kansas City, when the postal governors meet, is high noon for the direct mail industry.

“If an exigent increase goes through and the Postal Services finances are looking a little better, it would give Congress a false sense of security,” Quad Graphics’ Schick says. “They have a lot of other bigger issues to contend with and it would allow them to push postal reform off to the side. Next thing you know, it’s 2014, an election year, and reform will keep waiting.”

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