Decision on Postal Rate Hike Could Be a Holiday Downer

An increase would drive up the cost of delivering magazines

This year, the Grinch may go postal with an extraordinary rate increase. The U.S. Postal Regulatory Commission is expected to decide whether to allow the U.S. Postal Service to raise rates above the annual inflation rate increase on Dec. 22, on the eve of the holidays.

The proposed exigent increase would raise postal rates three times the rate of inflation for magazines, newspapers and other mail-dependent media beginning Jan. 26, adding hundreds of millions in costs

It could also depress mail volume, which has already declined in the last seven years due to increases in digital distribution for correspondence, advertising, billing and payments.

With time running out to get the PRC to reject the proposal, the MPA and a dozen other postal-dependent media organizations argue in a filing that the 2007-2009 recession–the basis of the USPS call for an exigent increase–was not the main cause of declining mail volume. (Due to a regulation, the USPS cannot base an exigent increase on the continuing effects of electronic diversion.)

"You could drive a mail truck through the holes in the Postal Service's arguments," said Jim Cregan, evp of government affairs for the MPA. "This has left the USPS with too little mail to cover the costs of its network. The Postal Service must face the facts and right-size its operations, not drive even more volume away by raising prices so drastically on its remaining customers."

The coalition also suggested that if the PRC goes ahead with an increase, it should be rescinded on Jan. 26, 2016, 24 months after it takes effect to make up for the losses the USPS suffered during the 2007-2009 recession.

Will the PRC go for the rate hike? The industry may get a better idea after Dec. 6 when reply comments are due.