USPS rate hike expected in 2011

Catalog mailers and magazine publishers are bracing for sizable postage price increases in January 2011, when the US Postal Service expects to implement an “exigent” price increase on mailing services.

The USPS plans to file a request for a “moderate” price increase with the Postal Regulatory Commission in the near future, possibly as early as July, confirmed USPS VP of pricing, Maura Robinson during a House subcommittee oversight hearing this week.

The increase will affect individual USPS mail categories at different rates. Industry observers interviewed during the event generally said they expected the average price increase to be about 5 percent. Catalog companies and publishers, however, are worried they could see increases as high as 10 percent because they mail within the Standard Mail Flats and Periodicals Mail product lines which the USPS says were not priced high enough. The postal service says – and the Postal Regulatory Commission concurs – these categories’ prices did not cover the USPS’ costs to handle them in fiscal year 2009, so rates need to increase.

“Prices for below-cost products will be increased to address the cost challenges; however, we intend to do so in a judicious and measured way to improve financial performance over time,” Robinson testified.

Catalogers and publishers, though, want the USPS to control other costs before giving them a rate hike.

James O’Brien, VP of distribution and postal affairs for Time Inc., said at the same hearing that the USPS needs to gain control of its costs in Periodicals Mail, something it has been unable to do since the introduction of automation.

“Before they hit us with higher prices, they need to make sure they’ve got their costs right,” O’Brien said.

The Postal Service Board of Governors decides on the amount and timing of postage price increases, so postal officials would not release an exact figure for the rate increase until the board rules.

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