EXCLUSIVE NEWS FLASH: Postal Rate Recommendation Could be Catastrophic for Catalogers

The Feb. 26 announcement by the Postal Regulatory Commission (PRC) of its postal rate recommendations on the surface looked like good news for mailers. But a closer look at the rates for the various bulk mail subclasses exposes a number of potentially enormous rate hikes for a significant number of catalogers. The PRC recommendation is now in the hands of the U.S. Postal Service’s Board of Governors, who can either accept, reject or accept them under protest.

Although the PRC recommended an average rate increase of 9.3 percent for Standard Mail, the bulk mail category that most catalogers and other direct mailers use, a closer look beneath its recommendations exposes potential rate hikes as steep as 43 percent for some catalog subcategories. “For anyone who doesn’t mail letters, the news is all bad,” says Dave Crofoot, CFO for Johnson Smith Co., a Bradenton, Fla.-based multititle mailer of the Betty’s Attic, Things You Never Knew Existed, The Lighter Side and several other catalogs. He pointed to several instances in which bulk mailers of flats (oversized mail that includes most catalogs) would have to pay considerably more than bulk letter mailers.

Eye on ECR Rates

Specifically, Crofoot points to the PRC recommended increases for Standard Mail enhanced carrier route (ECR), one of the most used classes among piece rate mailers. Per the PRC recommendation, that rate would go up between $0.08 and $0.16 depending on how deeply mailers enter the postal delivery system. “And that’s above and beyond the increase proposed by the USPS,” he points out.

Perhaps most alarming, Crofoot says is the ECR rate for mail that’s entered into postal sectional center facilities (SCFs). The current rate is $0.171; in its original rate filing, the USPS had proposed a 16.4 percent increase to $0.199. But although the PRC actually recommended a lower overall average increase of 14.7 percent, part and parcel of that are its recommendations for flats vs. letters: Although the PRC wants to see the ECR to SCF rate for letters increase just 7.6 percent to $0.184, its flat rate recommendation is for $0.207, a whopping 21 percent hike, Crofoot points out.