Will We Really Have a Year Free of Postal Rate Hikes?
A loyal reader just sent me the following email:
I was just looking over my past emails from you (yes, I do archive many of them). I did not see recent mention of any rate increases for 2009. Is that just because I missed it, or will we really have a year free of Periodicals rate hikes? We’re starting our advertising rate-setting process for next year and would like to factor in any higher postage costs.
Because one person had this question, it’s likely that others do as well, so I’ll print my answer to all of you, not just this inquisitor.
Under the new postal law the Postal Service is entitled to increase its rates annually by a percentage equal to the prior year’s CPI increase. Given its precarious financial situation, the Postal Service will have no choice but to exercise that option, so you can expect an average Periodicals increase every May for the foreseeable future equal to the increase in the CPI for the 12 months ending in February (when notice of the increase is given). The wild card is whether individual rates will increase by the average amount, as happened with the 2008 increase, or whether there will be significant variations from the average, as happened with the 2007 increase, the last under the old law.
It’s my educated guess that we will begin to see some variation beginning in 2009, with palletized, drop-shipped publications seeing below average increases and others seeing above average increases. With gasoline prices doing what they’re doing, I think that drop shipping will become even more important in terms of postage rates (but will result in much higher private transportation costs as well). I cannot predict the size of those differentials.
If you want to keep up to date on what size average increase will be filed, you can go to the Postal Regulatory Commission Web site then scroll down the home page to the lower right, where you will see a box captioned "Information for the Mailing Community."
Inside the box there’s a hyperlink that reads "Recent trend data." It will take you to a chart that gives the 12 month rolling average CPI increase. As of now, it stands at 3.5 percent, compared with the 2.9 percent bump just a few months ago that produced the May hike.
It certainly seems that number will continue to increase.