US mailers hit out at USPS mixed messages over postal rates

The US mailing industry has written to Postmaster General Patrick Donahoe urging him to drop his attempts to persuade regulators to allow an above-inflation postal rate increase. The Direct Marketing Association, along with the Association for Postal Commerce (Postcom), Alliance of Nonprofit Mailers and the Association of Magazine Media wrote yesterday to criticise the mixed messages coming from Donahoe over postal rates this year.

Donahoe has repeatedly briefed industry groups since the summer to the effect that 2012 prices will remain below the inflation-based price cap, stating that he does not want to enact a special “exigent” rate rise to counter some of the US Postal Service financial troubles.

But in the mean time, USPS attorneys have been filing with US regulators seeking to continue last year’s process of seeking $2.3bn in additional funds through above-inflation price increases, taking advantage of a potential loophole in US postal law price controls to claw back money lost because of the 2008-09 global recession.

As Donahoe has recognised in forums including the quarterly Mailers Technical Advisory Committee (MTAC) meetings, a major hike in postal rates could push more mailers into alternative communications channels, particularly internet-based systems, at a time when USPS cannot afford to lose more mail volumes.

Yesterday, the mailers’ groups said that although the Postmaster General has advised USPS customers to budget only for a conventional postal rate rise – this year of 2.13% on average – the continuing USPS pursuit of an exigent increase meant it was “prudent” for mailers to budget for the potential of an exigent increase in 2012 or 2013. Last year’s exigent proposal was for a 5.6% increase.

Mailing groups warned yesterday that if USPS pursues its exigent rate case, its major customers will have to continue allocating resources to their legal teams to fight the rate rise, wasting “precious time, energy, and resources” that “would be far better deployed constructively collaborating to solve the Postal Service’s financial problems and pushing for Congressional action in our common interest”.

At the very least, the mailing industry groups warned, the continuing uncertainty surrounding future postal rates “almost certainly will cost the Postal Service mail volume and revenue”.

The groups told the Postmaster General: “If you do not want an exigent increase and you do not want mailers to plan for one, withdraw the case. Actions speak louder than words.”

“Unless and until the Postal Service publicly withdraws its formal request for Commission approval of exigent rate increases, mailers must assume that the Postal Service is serious about seeking them. For the good of the Postal Service and the mailing community, we urge you to pull the exident request.”

Donahoe

At last week’s MTAC meeting, held at USPS headquarters in Washington DC, Donahoe said once again to key mailers to budget for an inflation-based rate rise in 2012, but was vague about the direction he was taking on the exigent case.

Donahoe said that with the failure of Congress to agree a national deficit reduction plan that could have included an enforced exigent rate rise, “we will weigh that up and try to come up with a definitive view”.

Conceding the continuing mail industry opposition to the exigent rise, he told mailers: “I do not want you to spend money on lawyers. Spend money on educating Congress instead.”

While facing increasing postal rates next year, US mailers are also set to be challenged by a shake-up of their drop-off procedures and potential changes to their delivery times, as the US Postal Service looks to close as many as 252 of its existing 461 mail processing plants across the country.

Yesterday, the Postal Service filed proposals to downgrade its First Class Mail standards, losing overnight service for end-to-end mail, as just a fraction of its huge effort to cut $20bn of operating costs from its annual budget by 2015.

USPS is currently hovering around its $15bn legally-restricted government borrowing limit while operating at a level that is seeing its annual losses spiral from 2010’s $8.5bn loss to potentially a $10bn to $14bn loss in the current financial year.