Breaking News: "Mother of All Rate Cases" Is Here: Magazines Staring At 11.4 Percent Postal Hike

By Matt Kinsman
05/03/2006

The Postal Service today filed a rate case with the Postal Rate Commission that proposes a system-wide postal increase of 8.5 percent, with magazines looking at an average 11.4 percent jump in rates. The proposed rate hike comes after a 5.4 percent postal increase in January. If it passes, rates will have gone up 17.4 percent in less than a year and a half.

The filing comes just a few weeks after some observers warned that the next proposed postal rate increase could be higher than what postal officials previously suggested (April 6, Future Postal Rate Hikes to be Higher than Expected). The proposed change, which Gene Del Polito, president of the Association for Postal Commerce, previously said could be "the mother of all rate cases" if it passes before postal reform can be signed into law, now enters a 10-month administrative examination by the Postal Rate Commission.

The case is prompting a renewed call for postal reform, which would not affect this rate increase but could cap future rate hikes. "Congress must take final action on postal reform legislation now," said Nina Link, president and CEO of Magazine Publishers of America, in a statement. "Although the legislation won't stop this case, reform will mean the end of unpredictable double-digit increases." Both the House and Senate have passed separate versions of the postal reform bill but now must create a joint version to present to the President (who has hinted at a veto of the bill should it reach his desk).

"Today's announcement by the United States Postal Service of yet another increase in postage rates, and the prediction of further increases beyond that, illustrates the need to enact postal reform legislation currently pending in the United States Congress," said ABM president/CEO Gordon Hughes in a statement. "This legislation has passed both chambers of Congress by huge margins, and the steps necessary to get the bill to the President's desk for signature must be completed without delay."

"The news today of the U.S. Postal Service's proposal to increase postage rates is not surprising given the rising energy costs and the agency's costs of doing business," said Rep. John McHugh, (R-NY), one of the sponsors of postal reform. "However, a 13.5 percent hike in just over two years borders on the excessive - and that's just the increase in first class postage. Other products would go up by more than 25 percent. Postal reform legislation that Congress is poised to enact would limit such extreme rate hikes, instead linking them to the Consumer Price Index, while also providing tools to ensure the future solvency of the Postal Service."

David Straus, Washington counsel for American Business Media, estimates that ABM members currently spend $325 million a year on periodicals postage. MPA estimates its members spend $1.6 billion on total postage costs annually. The proposed increase could be especially daunting for smaller publishers that don't have the option of cost-saving tactics like drop shipped pallets. Postmaster General John E. Potter is scheduled to appear at the ABM Spring Meeting in Scottsdale, Arizona, next week.