The news last month that the U.S. Postal Service may be increasing rates sharply for the so-called “underwater” classes/subclasses of Standard Mail flats raised plenty of questions.
Most pressing is the amount of the increase and how soon catalogs will see it, says Hamilton Davison, president and executive director of the American Catalog Mailers Association. Other questions: “Do catalogs need this magnitude of increase at all? Are the USPS and the PRC using proper costing methodology?”
The Postal Regulatory Commission’s Annual Compliance Determination for fiscal 2010 found that rates for Standard Mail flats are not in compliance with the 2006 Postal Accountability and Enhancement Act when it comes to “a fair and equitable apportionment of the cost of postal operations.”
The PRC wants the USPS to fix the problem, pronto, and many fear that the quickest “fix” is a hasty and hefty rate hike for catalogers. By some estimates, it would take a rate increase of 22.3% to bring flats to full cost coverage.
Davison compares the current situation to four years ago—just before the massive 2007 postal rate hike. Two things in catalogers’ favor this time around, he notes, are the existence of the ACMA, and the history of the significant volume declines the USPS saw after the big rate increase four years ago.
Then again, Davison says, “there are also strong forces of letter mailers who are pressuring this issue.” In fact, the PRC’s recent ACD may have given the letter mailers “ammunition to file a complaint case and try to force the PRC to increase catalogs 22% next year in a single step,” he adds.
The letter mailers are being aggressive attacking catalogs, Davison says. “They also have a lot of credibility with the PRC.” And the PRC prefers to base its decision on the written record submitted to it, “and that record is not flattering for catalogs.”
Continues at: Experts Weigh In On Likelihood of Huge Catalog Postal Rate Hike.
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