Postal Rate Hikes Pushed To May 31

April 17, 2015       Mark Hrywna      

A postage rate increase that’s expected to whack nonprofits that mail periodicals especially hard isn’t likely to change much, other than a new effective date later this year.

The United States Postal Service (USPS) on Thursday filed its response to the Postal Regulatory Commission’s (PRC) order from last month, amending some rates and correcting parts of the filing, with a new increase slated to begin May 31. The USPS originally planned a postage increase for April 26.

The PRC had directed USPS to equalize nonprofit and commercial discounts for high-density letters and flat, and provide calculations used to develop exigent surcharges for each new Standard Mail Flats Sequencing System (FSS) price category.

Individual publications need to work with their mail service provider to calculate their own impact, according to Stephen Kearney, executive director of the Alliance of Nonprofit Mailers. “Right now, it’s going to find a very small impact, I think,” he said. Nonprofit publishers who have started running the new numbers are “very disappointed” that the Postal Service reduced their huge Periodicals rate increases by less than a percentage point in some cases, he said.

The total percentage increase for Periodicals would be an overall average of 1.966 percent, but certain categories within the class could range from -8 percent to 16 percent. In particular, nonprofits that mail light-weight, low advertising magazines and newsletters are considering phasing out entire titles or reducing frequency, said Kearney. “High quality content will continue to leave the mail and consumers will continue to be less interested in going to their mailboxes,” he said. “More important, nonprofits will be hampered in delivering their missions to millions of Americans.”

Periodicals revenue has not covered its costs for the past decade, according to the USPS, so the PRC has urged the service “to use its pricing flexibility to provide efficient pricing signals and improve cost coverage” for Periodicals. USPS hasn’t done enough to reduce its own costs, Kearney argued, and now customers are being penalized.

The PRC is likely to allow a couple of weeks for comments before it gives its final approval, Kearney said, but it will be interesting to see the Court of Appeals comes back with its decision on the exigent rate case. A rate increase in late May could be followed by a 4.3-percent price reduction later this summer if the Court of Appeals doesn’t allow the USPS to make the exigent increase permanent. The Postal Service is projected to reach its limit of $3.2 billion in revenue from the exigent increase later this year.

In December 2013, the PRC granted a request by USPS for an average postage increase of 4.3 percent until it collected $3.2 billion to make up for losses suffered in 2008-09 during the Great Recession. The exigent increase went into effect in January 2014, along with an inflation-based increase of 1.7 percent. In January, the USPS was ordered to give 45 days notice before it rolls back the surcharge and provide bi-weekly estimates in the final three months of the exigent charge.