Post Office Approves Extra Rate Hike on Christmas Eve

Increase will do nothing to help USPS problems

As feared, the U.S. Postal Service passed a 4.3 percent exigent rate increase on Christmas Eve, delivering a lump of coal to magazines, newspapers and direct mailers.

The Postal Regulatory Commission voted for the increase on top of the annual postal rate that is capped by the consumer price index, making it the largest hike in more than a decade.

Stamps for first-class letters will go up three cents to 49 cents on Jan. 26, while bulk mail and periodicals rise 6 percent, a serious blow to mail-dependent industries.

In its decision, the PRC blamed the "Great Recession" for the increase, but rejected the USPS' request to make the increase permanent and granted the rate hike for two years. (The dissenting commissioner questioned whether two years would be enough to offset the loss.)

"The Postal Service will be reimbursed for exigent losses that can be reasonably quantified. We have determined that amount to be $2.8 billion to cover the 25.3 billion pieces of volume lost between 2008 and 2011. The funds will come from a rate surcharge that will last just long enough to recover the loss," said PRC chairman Ruth Goldway.

Mailers had fought hard against the increase, arguing that the increase will only add to USPS' problems. 

"This rate increase does not fix what is wrong with the Postal Service, will further depress mail volume, and will worsen the Postal Service's financial woes," said a coalition of mailing industry organizations, including MPA—The Association of Magazine Media and the Direct Marketing Association.

"Sadly, the commission does not set a date for the phaseout," added Jerry Cerasale, DMA's svp of government affairs. "The commission says the USPS should recover the losses due to the Great Recession in less than two years, but will await quarterly volume and financial results from USPS to determine any phaseout date. That is a cop-out. Mailers have received a lump of coal for Christmas and will continue to receive more lumps for at least the next two Christmases. DMA is concerned that the phaseout will never come. It was time for the PRC to stand up and it failed. It is a sad day for mailers.”

Publish date: December 25, 2013 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT