It was the worst Christmas present they’d ever gotten. It was like a bushel of coal in a mailbag for direct mailers and catalogers when, on the evening of December 24, 2013, the Postal Regulatory Commission (PRC) approved the 4.3% “exigent surcharge,” an emergency measure to allow the U.S. Postal Service to reclaim losses due to the Great Recession. But last night the Postal Service sent a “Yes, Mailers, there is a Santa Claus” letter, saying it intends to remove the surcharge on Sunday, April 10, when $4.6 billion in extra revenue would be collected.
At the time the surcharge was instituted, a mailer’s group that had hoped for a surcharge in the 2% range labeled exigency an “unmitigated disaster.” The group’s dismay was extended when the D.C. Circuit Court of Appeals, reacting to a petition from USPS, asked the PRC to reassess the make-good amount. The original assessment of $2.77 billion that was collected by last summer had another $1.9 billion added to it and exigency endured. This spring, however, life begins anew for mailers.
“Now that the industry has provided $4.6 billion in financial relief, we recognize that there is a new normal in which declining volumes and increasing costs are today’s realities,” American Catalog Mailers Association President Hamilton Davison said in reaction to the announcement. “The ACMA is committed to working with Postal leadership to find workable solutions that help drive volume, reduce costs, and create a win-win for both the USPS and the catalog mailing industry.”
Chris Oswald, VP of advocacy at the Direct Marketing Association added that “the elimination of the exigency rate also presents an opportunity for the Postal Service to enhance its business stability by adapting to the 21st century economy. Reliance on emergency rates is simply not a sustainable business strategy.”
The notice submitted to the PRC by the Postal Service said systems will shift to the new rate on April 10 “absent action by Congress or the courts to make the existing exigent surcharge for Market Dominant Products and Services part of the rate base.” Both Postmaster General Megan Brennan and Sen. Tom Carper (D-DE) had been pushing to get the senator’s iPOST bill institutionalizing exigency passed before the day arrived.
“We find it hard to blame the Postal Service for trying to get a $2 billion lifetime annuity,” said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers. “Hopefully, the third postage reduction in U.S. history will stimulate more use of the mail. We think nonprofits will mail more.”
The Postal Service likes to institute price changes on Sundays, when usage of systems is low and there’s minimal pressure to perform at optimum levels. Daily revenue fluctuations can result in a one- or two-day variation in arriving at the revenue limitation, which is expected to happen sometime on Saturday, April 9.
