The US Postal Service’s announcement on February 11 that rates for First-Class Mail, Standard Mail, periodicals, package services and special services would increase in May was met with little surprise by mailers. Overall, response to the proposed rate increase seems to be fairly positive, although some have greeted the news with caution.
There was really no rate shock for any particular class, says John Campo, VP of postal relations for Pitney Bowes. “This is what the industry expected,” he says.
In compliance with the Postal Accountability and Enhancement Act, the average price increase per class cannot exceed the Consumer Price Index, which was capped at 2.9% as of January 16. However, within a class, prices can vary.
“We consider all relevant factors and make our pricing decisions accordingly, just like a private business,” says David Partenheimer, a USPS spokesman.
These factors included the effect of the rate increase on the general public, business mail users and other enterprises in the private sector that are engaged in the delivery of mail other than letters, according to the USPS. Other factors include the importance of pricing flexibility to encourage increased mail volume and operational efficiency.
According to a document written by the USPS and submitted to the Postal Regulatory Commission, the proposed price changes for Standard Mail letters and Standard Mail flats reflect the USPS’ decision to moderate the increases for catalogs and other flats following the large rate increase in 2007. Standard Mail parcels had a relatively large rate increase, which reflects the higher cost of processing parcels in comparison to other types of mail, the USPS wrote.
Overall, the announcement indicates the USPS’ willingness to “listen, understand the value of partnerships with the private sector and to maximize the efficiencies that the private sector can bring to bear during rate changes,” Campo said.
“Generally speaking, nonprofit mailers made out very well in this rate proposal,” says Tony Conway, executive director of the Alliance of Nonprofit Mailers.
While the average increase for commercial Standard Mail was about 2.9%, the average nonprofit Standard Mail increase was just 0.7%, he notes. “This is a tremendous break,” he says.
However, Charles Howard, VP of postal affairs and special projects for Harte-Hanks, says he was disappointed to learn that the USPS would be raising the rate for Standard Mail flats by 0.86%. He thinks that, to stimulate volume for Standard Mail flats, which has been dropping, the rate should have been held steady or reduced. Howard says that he had trouble coming up with the same numbers as the USPS. “For all of my clients, I see rates that are higher than what [the USPS] published,” he asserts.
For example, according to the USPS, Standard Mail letter costs will increase by 3.39%. However, Howard found that most of his clients would see increases between 3.5 and 4.2%.
Overall, Howard thinks his best clients — those with good lists and high density — will be paying more than clients with lower density mailings that are not as easily coded. “Everyone needs to look hard and see how this is going to affect them,” he says of the rate changes. “The real story is that the devil is in the details.”
