There’s never a dull moment with the Postal Service. The USPS has filed notice with the Postal Regulatory Commission (PRC) for a postage price increase based on its Consumer Price Index (CPI) cap authority. Details are available on the PRC website here and here. If approved by the PRC, new postage prices would take effect April 26.
While the overall average increase is 1.966%, there is a lot of variability among the individual rate cells, so be sure to look closely at the rates you actually use. From a high level view, Periodicals, Parcels and Standard Mail Flats were hit with the largest increases – 2.4% or more. These types of mail got a higher bump because the USPS believes they are not covering their processing costs. Talk to catalog marketers and magazine publishers and you’ll hear a different story. Letter mail fared a little better, with Standard Mail Automation Letters seeing an average 1.835% increase and Standard Mail Saturation and High Density Letters seeing a 2.027% increase.
Destination Entry Discounts Not Universal
One of the interesting things about this proposal is the discounts for entering mail at an SCF or NDC are not consistent, as they have been in the past. The new discounts haven’t changed much, but there are now ranges of savings for each level of entry depending on sort tier. (For example, Standard Mail Automation Letters will see SCF entry discounts of $44 -$49/M and NDC entry discounts of $32 -$38, depending on tier.)
Complications Over Board of Governors
Postal regulations require that all price changes must be approved by the USPS Board of Governors (BOG). Because Congress failed to confirm new members to the BOG last year, the BOG no longer has a quorum. Until new members are confirmed, a Temporary Emergency Committee (TEC) of the remaining governors is acting on behalf of the BOG. Since it was the TEC that approved this increase, we could see a legal challenge to their right to do so.
Future of Exigent Surcharge Is Uncertain
This proposed price increase will initially be added to the existing price structure that includes the exigent surcharge that was imposed last year. The future of this surcharge remains uncertain. We still have no word on a ruling from the U.S. Court of Appeals for the District of Columbia. If the court rules in favor of the industry and the PRC, the exigent prices remain a temporary surcharge, as designed. In that case we should see rates decline by the amount of the surcharge late this summer. If the court rules in favor of the USPS, the surcharge could become a permanent part of the rate structure. The surcharge could also be impacted by actions taken by Congress. Some recent postal reform proposals have included a provision making the exigent surcharge permanent, although that would be strongly opposed by the mailing industry.
Proposed Postal Promotions
As part of this filing, the USPS is also proposing four promotions for 2015. All are pick-ups from earlier promotions, but will be run for longer periods of time than in the past. They are:
- Earned Value Promotion (for using Reply Mail), May 1 – July 31;
- Color Transpromo Promotion (for First-Class Mail only), June 1 – November 30;
- Emerging & Advanced Technology Promotion, May 1 – October 31;
- Mail Drives Mobile Engagement Promotion, July 1 – December 31.
We’ll have more information on these promotions in a future post.
Stay tuned to SpeakingDIRECT as we will keep you up-to-date on any new developments related to postal pricing. Be sure to contact your IWCO Direct account team if you have any questions about the impact of these changes on your mail.
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