Those of us involved in the mailing industry are about to witness a unique event: Falling postage prices. The Postal Service has notified the Postal Regulatory Commission (PRC) that it will remove the exigent surcharge from postage rates on Sunday, April 10.
The PRC rulings that allowed the Postal Service to collect the exigent surcharge to make up for revenue lost during the Great Recession put a $4.6 billion limit on the amount of money that could be raised. In its notice to the PRC, the Postal Service said it had collected $4.3 billion from the surcharge through February 14, and it expects to collect the remaining amount by April 10.
In that notice, the Postal Service also stated that the surcharge removal will occur “absent action by Congress or the courts to make the existing exigent surcharge for Market Dominant Products and Services part of the rate base or to otherwise extend it.” It appears highly unlikely that either of those things will happen before April 10―Congress is too absorbed in other issues to pass a stand-alone postal bill in the next six weeks, and the D.C. Court of Appeals has just started receiving briefs in the Postal Service’s latest appeal of the temporary nature of the surcharge. While it may not be over until the Wagnerian soprano sings her final aria, we can see her in the wings ready to take the stage.
The Exigent Surcharge Battle is Over, But More Work Remains
Once this roll-back is complete, all of us in the mailing community will need to redouble our efforts to ensure the Postal Service has a robust business model that will provide it with secure, stable financial prospects well into the future. USPS management has already expressed concern about this lost income stream in their announcement of the surcharge removal.
We believe the allowance for above-CPI price increases in current postal law was intended to address unexpected, emergency situations, not to provide an ongoing stream of income for the Postal Service. We have long been advocates of providing the Postal Service with the tools it needs to be financially successful, but extending the exigent surcharge is not an effective tool. We look forward to working with the Postal Service, the PRC, our Congressional representatives, and other postal stakeholders to create a stable financial future for the Postal Service.
If you have questions about what this rate decrease will mean for your direct mail programs, be sure to reach out to your IWCO Direct account team. And if you are wondering what to do with this postage windfall, we encourage you to consider the value of direct mail to your overall marketing program and to reinvest the anticipated postage savings in an expanded mail effort this year.
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