Rumors are circulating that the next postal rate increase will be higher than what postal officials have previously suggested. Rather than an increase in the mid-single digits, some sources are saying the increase could be in the double digits.
The Postal Service could base its rate request on projected costs for the 2008 fiscal year, beginning October 2007. "It is not surprising that the Postal Service would want to get its rates as high as it can, in case postal reform, with its CPI-based price cap, actually passes," says David Straus, Washington counsel for American Business Media. "Clearly, the Postal Service will want the base as high as possible if it is to be limited to strict percentage increases thereafter."
The rate filing is expected this month, followed by the postal Rate Commission beginning a 10-month review process, with new rates most likely taking effect in spring 2007.
"If the Postal Service proposes significant rate design changes for Periodicals, such as sack charges and significantly enlarged drop ship counts, it is probable that (1) some publications, primarily those in smaller sacks that are origin entered, will face increases significantly higher than average and (2) publishers will be able to moderate the increase substantially if they move from, sacks to drop shipped pallets," says Straus, who estimates that ABM members spend $325 million annually on Periodicals postage.