Mailers girding for postal rate increase fight

The mailing industry is regrouping for battle over the possibility of an emergency rate increase request from the U.S. Postal Service.

After lying dormant for the last 2-1/2 years, the Affordable Mail Alliance, made up of nine trade groups and companies, issued a news release yesterday stating that the USPS Board of Governors “is set to decide on the matter imminently.”

The board, which is scheduled to meet in closed session next Tuesday, ordered postal management to study the possibility of an “exigent” rate increase earlier this spring after abandoning plans to end Saturday mail delivery.

At this point, no decision has been made on whether to pursue that route, USPS spokeswoman Katina Fields said in an email. Although the board and postal management know that raising prices affects mail volumes, Fields said, “we must consider ALL options to cut costs and increase revenue.” Among the items on the agenda for next Tuesday’s meeting is “Pricing.”

Under a 2006 law, the Postal Service can cumulatively raise rates in accord with the annual inflation rate without much hassle. Seeking an exigent increase entails a full-blown Postal Regulatory Commission proceeding at which the Postal Service has to make the case that extraordinary circumstances warrant a larger increase.

When the Postal Service last tried that option in July 2010, it cited the recession’s impact on revenue as a reason for seeking the 5.6 percent boost. But it encountered a fierce backlash from the mailing industry and members of Congress; the commission unanimously squelched the request four months later.

If postal leaders decide to try again, they face the argument that higher prices will hasten a customer exodus. “You’re going to exacerbate the disappearance of mail,” Tony Conway, executive director of the Alliance of Nonprofit Mailers, said in a phone interview today, adding that many of his members are still in shaky financial condition themselves. In yesterday’s release, the Affordable Mail Alliance–which includes Conway’s group–said the result “will be more jobs lost in the private sector in order to maintain an overbuilt postal system, and even less revenue to the Postal Service as mailers flee.”

But despite aggressive cost-cutting efforts since 2010, Fields said, the Postal Service’s financial outlook has worsened because of the continued decline of first-class mail volume and Congress’s failure to pass “comprehensive postal reform legislation.”