Unless Congress or the courts intervene, a postal rate surcharge in place since
January 2014 will be rolled back on Sunday, April 10, giving us the first rate decline in nearly a century.
Sounds like great news for direct marketers, right? And in many ways it is. But what about the Postal Service’s claim that the rollback will increase its annual net losses by $2 billion, hampering its ability to operate effectively? Will we see changes in the future as USPS struggles to deliver innovation and quality?
We checked in with Truman Pope, chief of American Litho’s lettershop, for his thoughts on the rollback and what lies ahead.
Truman, what’s the bigger story behind the rollback?
As you can see, this isn’t a true rate reduction and it’s definitely not something the Postal Service wants. The Postal Regulatory Commission, or PRC, set a very specific limit on the exigent surcharge put in place to help the Postal Service recover from plunging revenues in the wake of the Great Recession. But the Postmaster General says it didn’t begin to cover the huge drop in revenue, which spanned several years and reached $7 billion in 2009 alone.
What exactly is the PRC’s role in regulating rates?
The PRC gained broader powers in 2006 when Congress passed the Postal Accountability and Enhancement Act. The idea was to hold USPS fully accountable for the efficiency and quality of its operations, which would in turn keep rates down and prevent price volatility. Prior to this, rate hikes were all over the place, making it really hard for direct marketers to plan and budget effectively. Leaders in our industry pretty much feel that the PRC’s oversight has led to greater rate stability and efficiency at USPS. We’ll know more about that when the Postal Service undergoes a 10-year review in 2016 as required by the Act.
So it’s nice to see lower rates for the time being, but what about the Postal Service’s claim that it’s operating on the edge?
It will be interesting to see what the quality review shows. We’ve heard USPS say that, even though revenues are down drastically, they haven’t laid workers off. In fact, they have more full-time employees now than they did 2 years ago. In 2017, postal officials may head to Congress and deliver the message that, essentially, they’re performing well but suffering financially, which could block their ability to innovate. No one has a crystal ball to foresee how lawmakers will respond, but we’ll be watching closely.
Do you expect there to be a lot of buzz about rates at the National Postal Forum this month?
It does feel like rates will be the pink elephant in the room. All of us look forward to hearing what Postmaster General Megan Brennan says about the Postal Service’s health going forward. Our industry obviously wants to see rates remain stable. Managing workflows and labor and materials costs are all mandates we have to follow to stay in business, so it stands to reason that USPS as our partner should do the same.
In the meantime, how should direct marketers view the 4.3% savings?
It’s a great opportunity to reach more prospects and customers with the same budget dollars. Put the savings together with postal discounts for mailings that incorporate mobile engagement and multi-sensory techniques and you’ve got a total winner. Whatever your goal, we’re ready to help.
Truman Pope is American Litho’s senior manager of lettershop services. With 25+ years in the business, he works in close partnership with USPS and our full direct marketing team to deliver efficiency and savings for clients in all industries. Reach him through our Contact Us page.