Postal Service Files for Special Rate Increase in January
Move could push mailer costs more than 4 percent.
Thought the postal battle had achieved temporary détente? Think again.
The U.S. Postal Service this week asked the Postal Regulatory Commission to let it implement an exigent rate increase averaging more than 4 percent across most classes of mail in order to make up for volume lost during the recession, reports anonymous blogger Dead Tree Edition.
Last year, the PRC denied a similar request to boots rates by as much as 8 percent, saying that USPS cashflow problems were not the result of the recession. However, a federal court has ordered the PRC to review that ruling.
"The Postal Service suffered financial harm directly associated with extraordinary and exceptional volume losses that the [inflation-based] price cap mechanism is incapable of addressing," the USPS brief says. "The Postal Service respectfully requests that the Commission recognize $2.34 billion as a plausible lower-bound estimate of the Postal Service’s financial harm ‘due to’ recession-related volume losses in FY 2008 and FY2009, and approve exigent rate increases (for January 2012 implementation) on that basis."
Meanwhile, a joint filing by four industry mail groups including Magazine Publishers of America says no way. "The court left in place the Commission’s findings that the Postal Service had submitted no evidence indicating that its request was causally related to the recession, and that the Postal Service’s financial problems were caused in large part by longstanding structural issues, not the recession."
When it comes to the "Three P’s"–printer, postage and paper–postage costs have exploded in recent years, Cygnus Business Media vice president of operations Tom Martin told FOLIO:. "In 2000, printing was 45 percent to 55 percent of costs, paper was probably 20 to 25 percent of costs, and postage was between 30 to 32 percent. If you look at today’s costs, the printer has probably lost 15 to 20 points because the printer is probably sitting with only 32 percent of overall costs. Paper hasn’t changed that much but the number that has changed tremendously is postage. That’s probably sitting at 46 percent of overall costs depending on the magazine."