What the Latest USPS Rate Hike Means for Magazines
“Uncertainty is the new normal.”
After the latest USPS rate hike, it’s going to cost more to ship magazines to your subscribers. But it might not stay that way.
The USPS announced a rate increase last week intended to keep mailing prices in line with inflation—a jump of about 1.9 percent across the board. It’s a change that’s expected to generate about $900 million annually for the struggling postal service.
While periodicals as a whole will be 1.965-percent higher, accompanying changes mean that some magazines will be treated differently than others. Certain rate cells* will see price reductions of more than 20 percent, while others will rise by up to 100 percent.
“The postal service is making more changes to the rate design than in past years. In the case of periodicals, there are a number of new rate cells and preparation requirements that’ll be going into effect,” says Rita Cohen, senior vice president of legislative and regulatory policy for the MPA. “That makes it very hard to analyze what the impact is going to be on operations and pricing. So we’re working with printers and other supply-chain providers to figure out some of the data that’s missing. We know that, overall, the postal service asked for the allowable CPI increase on periodicals, but we don’t know exactly what it means for individual publishers.”
“Uncertainty Is the New Normal”
The 1.9-percent Consumer Price Index (CPI) increase is set to take effect in late April, but another cost—the 4.3 percent exigency surcharge enacted in January 2014—is expected to expire just a few weeks later (no definitive date is set; expiration is tied to the amount of money generated from the surcharge).
So, as things stand now, prices will go up 1.9 percent in April, then down 4.3 percent at some point this summer—a 2.4-percent net reduction.
It gets more complicated though. The future of the surcharge is in question as a challenge to its legality is pending a court decision. Meanwhile, a proposal to make it permanent sits in Congress.
And that’s all going to play out before next year’s CPI increase is announced.
Impending changes to USPS leadership—Postmaster General Patrick Donahoe is retiring Feb. 1, and a new Postal Regulatory Commission chair appointment is coming—add to the mire.
That uncertainty means it’s going to be difficult for publishers to budget for distribution costs. It’s something they should get used to though.
“All we can [tell publishers] is that they need to move forward in environment where uncertainty is the new normal,” says David LeDuc, senior director of public policy for SIIA. “We were in a fortunate period where rates were predictable under the previous legislation. In the absence of any new legislation changing things, we tell members and companies that this is quite possibly the new standard.”
*Editor's note: Rate cells may fluctuate by as much as 100 percent, not the total cost of mailing, as previously stated.