Budget for a Postal Increase?

By: Joseph E. Schick, Director, Postal Affairs
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Earlier this month we celebrated Christopher Columbus discovering America and the USPS discovering that all it takes to make mailers happy is to announce that there will be no postal price increase for Market Dominant Products in 2010. (Note: Competitive Services Products are not covered by this announcement and could increase in 2010.) Considering the current financial situation of the Postal Service and its risk-averse culture, this is a bold statement and should confirm that the Postmaster General and the Board of Governors are committed to making the hard decisions needed to stop the volume loss and begin the recovery. It should give all mailers a little more confidence in the USPS. It gave me confidence, and it also gave me another reason to raise a glass to Arthur Guinness!

We know this alone isn’t the silver bullet for getting us out of the nation’s economic slump, but it does eliminate one of the major concerns, and therefore barriers, to using the mail for advertising and marketing products and services. And for that, the USPS should be commended and mailers need to support that action by reinvesting in print and mail. I know it’s not that easy, but let’s hope the consumer starts to do their part and then it does become easier.

I’ve been asked if this guarantees no price increases in 2010, and therefore, no need to budget any money for postal increases. The answer to that is “not so fast my friend.” There is actually other ways for postal prices or costs to rise without a CPI or exigent filing at the Postal Regulatory Commission (PRC). The USPS could tinker with current prices and/or workshare discounts within a class of mail. As long as there is no increase at the class level, it is allowed. Regulations can and will change that have the net effect of pushing mail into a different, and usually higher, pricing category. At the very least, regulation changes will increase the cost of creating and/or producing the piece. That is known as a cost shift to mailers or their mailing service providers/printers.

So while we celebrate the news, let’s also be attentive to other impactful postal activity throughout the next 12 months. Do I really think the USPS would back-door price increases in this manner? Hopefully no. But with this announcement, I’m reminded of the immortal words of President George H.W. Bush who famously promised, “Read My Lips…..No New Taxes!” I’m not comparing taxes to postal prices. Well, maybe I am, and we all know what happened to the President’s political career after going against his promise.