Magazines, newspapers and marketing businesses that depend on the U.S. mail suffered a setback in the fight to ward off an exigent rate hike on top of the annual rate that's tied to the consumer price index.
Citing its "precarious financial condition," the Postal Board of Governors proposed a rate increase of 5.9 percent on top of the annual CPI increase of 1.6 percent. If approved by the Postal Regulatory Commission, the rates would go into effect Jan. 26, 2014.
"Of the options currently available to the postal service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges," said Mickey Barnett, chairman of the Postal Board of Governors that voted on the measure.
Disappointed that its lobbying efforts didn't pay off, members of the Affordable Mail Alliance will be forced to litigate its case before the Postal Regulatory Commission, a process that could take up to 90 days.
The cash-strapped Postal Service recorded a $15.9 billion net loss last fiscal year and is expecting a record loss of $6 billion in the current fiscal year.
But the mailing industry argues that raising rates is not the way to solve the U.S.P.S. financial woes.
"Rather than lowering prices at times of weak sales, a common practice in businesses across the United States, the Board of Governors has misguidedly decided that raising prices will help cure its lack of sales. On the contrary, the problem of decreased mail volume will only worsen as mailers cease to rely upon the United States mail to reach consumers," said the Direct Marketing Association.
And instead of the mailing industry working on real reform at the U.S.P.S., mail stakeholders find themselves having to divert resources to stopping a rate increase.
"We are deeply disappointed that, despite the facts, the board of governors chose to seek a counterproductive rate increase instead of working with the industry to secure meaningful, long-term reforms through congressional action," said Mary Berner, president and CEO of the Association of Magazine Media.
Rep. Darrell Issa (R-Calif.), sponsor of the Postal Reform Act, who called the U.S.P.S. proposal a "desperate cry for help," said in a statement that a long-term solution calls for more than just short-term rate increases.
"If costs are not addressed, USPS will ultimately be forced into a string of rate increases much larger than the ones today that will inevitably trigger an irrecoverable death spiral for the agency," said Issa.