With the exigent price hikes finally removed from USPS rates, business mailers have been enjoying the first postal decrease in a century. The breather, it appears, could soon be over…and mailing professionals are not taking it sitting down.
While the temporary rate increase was designed to get the Postal Service through the recession and accompanying drop in mail volume, some have been arguing for months that the hike should be permanent. The USPS argues that removing 4.3% hike is a leading reason for their bleak economic outlook. That, plus the onus of having to prefund their retiree health plan, is unsustainable, according to Postmaster General Megan Brennan. They want hikes that are higher than the inflation-based cap currently in place.
The mailing industry isn’t buying it, saying the organization has plenty of opportunities to fix their own situation instead of relying on their captive audience of mailing customers to foot the bill.
“The MPA, along with the Alliance of Nonprofit Mailers (ANM) and the Association for Postal Commerce (PostCom), disagrees with that assessment, submitting comments to the PRC this week calling on it to ‘retain the inflation-capped pricing structure that has protected captive users of the Postal Service’s monopoly services for the past decade’,” writes Greg Dool in Folio.
“The Postal Service wants to raise rates faster than inflation because it says its finances are upside down,” said ANM president Stephen Kearney, 33-year veteran and former treasurer of the USPS. “But our expert analysis shows that USPS is actually in good shape and in fact has made an operating profit in each of its last three fiscal years.”
Other mail industry executives agree: “On the one hand, USPS assiduously guards the mail and mailbox monopolies that federal law guarantees, protecting it from the competitive market forces that private industry has had to withstand,” said Linda Thomas Brooks, MPA president and CEO, in a statement. “But at the same time, USPS seeks unfettered pricing freedom, with only minimal regulatory oversight.”
Freeport Press’ Mailing and Distribution Manager Tom Watry thinks the USPS’s claims that it needs the higher rates ring hollow, saying “this is the same argument they have been having for the last few years, just coming at it from a different angle.
“The Postal Regulatory Commission (PRC) has an important role in controlling the rates and the USPS,” says Watry. “When the recession hit the USPS lost a lot of revenue like a lot of us. The PRC ruled for the exigency surcharge of 4.3% added to the rates to help offset some of their losses but that rule had a time deadline.”
Watry claims that the USPS got used to the additional revenue and now needs it to help maintain regular operations – even though the economic crisis of the recession is over.
“Last year the PRC ruled against keeping the exigency surcharge and we actually saw a postage decrease, this is the first decrease in my career,” Watry continues.
Meanwhile, the Postal Service Reform Act of 2017, introduced in January and amended this month, attempts to help the USPS, without adding to the tax burden of the U.S. consumer. It’s still not clear if there will be any rate hikes higher than those allowed by the legislated inflation cap.
The mailing industry, for its part, submitted some specific suggestions to the PRC on how the USPS might improve its own financial well-being, Dool notes.
“Among them: reducing compensation for employees, which the associations argue are overpaid compared to their counterparts in the private sector; placing renewed emphasis on driving productivity; conceiving new sources of revenue, like advertising on mail trucks; and, simply, making better decisions when it comes to management and pricing,” he recounts.
As with anything related to the Postal Service, don’t expect any quick answers.
“In January, the MPA filed a request — backed by several other organizations, as well as UPS — to delay the March 20 deadline for submitting comments on the upcoming rulemaking until after the PRC had conducted its review,” Dool notes. That request was denied, but the PRC still isn’t expected to reveal its findings — or any recommended rule changes — until ‘early Autumn’.”