USPS Up to Old Tricks in Exigent Filing
The U.S. Postal Service showed a lack of imagination in its exigent rate case filing this week.
The filing, which calls for an average 5.6% hike across the board, looked strikingly similar to the rate cases it used to file under the system that prevailed before the Postal Accountability and Enhancement Act (PAEA) of 2006. That act was supposed to guarantee small annual rate increases based on the rate of inflation.
But even that “modest” increase was not enough.
The postal service had the brass to slip in a proposal to hike the rates for small standard mail parcels by a whopping 23.3%.
With a straight face, Maura Robinson, USPS vice president of pricing Tuesday, said the USPS had to drastically hike rate in this category because it was “underperforming.”
Funny, but in the last increase in 2009—which averaged 3.8% across the board—the rates for standard mail parcels increased 16%. http://directmag.com/directmail/standard-mail-rates-rise-0211/index.html.
Couldn’t the USPS think of something different?
Robinson apparently tried to rationalize this decision by saying these types of packages should be reclassified as competitive products and that the USPS will file for a classification change.
But that won’t happen until this fall at the earliest, she said.
Lest we all succumb to the temptation of condemning the USPS for everything evil in this world, let’s remember the postal service could face a possible $7 billion loss this fiscal year and still has to prepay $5.4 billion each year to cover the healthcare costs of retried employees.
And the USPS Inspector General earlier this year reported the that the postal service and its predecessor the Post Office Department overpaid its pension obligations to the Civil Service Retirement System by $75 billion over the past 40 years. Click for more http://directmag.com/postal/0122-postal-usps/index.html.
While all this is true, it seems unlikely that the currently deficit-obsessed Congress is gonna want to take up either of these issues any time soon.
No doubt, the USPS is gonna face stiff opposition to this proposed rate hike.
Already, mailer groups have begun questioning its legality. In addition, a group calling itself the Affordable Mail Alliance, a coalition of Postal customers, has sprung up to fight this proposed rate hike.
But even if the USPS does get substantial financial relief from any of these quarters, will it be able operate efficiently and hold onto universal service?
Or will it find ways to keep asking for more handouts?
July 9th, 2010 at 12:58 pm
try mailing those same parcels at ups or fedex no even with a 23% increase the postal service is still cheaper. the fact is you want them to do it for next to nothing as long as you can profit
July 9th, 2010 at 3:35 pm
Nothing like a rate increase to make marketers mail smarter. Marketers don’t use direct mail because they have extra spend, they use it because it has consistently proven to accomplish their goals. Instead of whining about the changes, the industry should be defending the value direct mail has compared to ther media.
We haven’t had a rate increase in nearly two years. We knew it was coming. Get over it.
July 14th, 2010 at 8:54 am
Ed nailed it on the head. Call it whatever you want but the USPS, like countless other entities, play by their own rules… at least they think they do.
But can anyone be truly surprised by this latest increase? Hell no…
The key is to constantly refine your tactics and use direct mail - like you do ALL mediums, wisely.
http://tinyurl.com/2vk49ez