Commentary & Analysis
U.S. Postal Service Proposes Price Increases
By Adam Dewitz
Published: July 6, 2010
The U.S. Postal Service has proposed increasing the prices to help close a projected $7 billion budget shortfall in 2011 Fiscal Year. Under the proposal the cost of a First-Class stamp 2 cents to 46 cents. Periodicals will see an 8 percent increase, catalogs rates will increase 5.1 percent and Standard Mail will see a 23 percent increase.
The increases would go into effect January 2, 2011. The Postal Service says the price increases will generate $2.3 billion for the last three quarters of the 2011 Fiscal Year.
The Affordable Mail Alliance, a coalition of industry associations and Postal customers is lobbying the Postal Regulatory Commission to reject the prices increases. Jerry Cerasale, senior vice president, Government Affairs at DMA, and spokesperson for the Affordable Mail Alliance issued a statement saying, "Rather than gouging its customers with rate increases that are 10 times the rate permissible by law, USPS should be eliminating its operating costs; inflation in postal costs was over six percent in 2009. They should be making the hard business decisions and not raising rates."
Other groups question the legality of the increase after postal reform in 2006 tied postal increases to inflation. The law allows the Postal Services to increase prices above inflation if it can demonstrate “exceptional or extraordinary circumstance.”
Tony Conway, executive director of the Alliance of Nonprofit Mailer told DIRECT Magazine, “We don’t think it’s legal at all. And we don’t think these circumstances that the postal service is apparently going to use to justify this increase are up to what Congress intended when it drafted the [PAEA] legislation.”
Adam Dewitz is CTO at WhatTheyThink. He has detailed knowledge of: Printing and Publishing Technology, Web-enabled Print Production, Software Development, Web Development, Information Systems, and has served in production and technology roles in printing companies.
I struggle to understand the escalation of mailing prices. I understand the theory: increase prices and if volume remains the same then post office makes more money and lowers their debt. But it's more likely that raising prices will decrease print and mail volumes resulting in less work for the printers and mailers and more debt for the post office. Am I crazy? I don't think this is win - win scenario. In fact in Star Trek terms its the Kobayashi Maru or the no win scenario.
I think that the increase of postage rates is a great thing.
1) It should hopefully allow the USPS to make money (that's why we are all in business, right?).
2) It will hopefully eliminate a lot of the junk mail that exists today.
3) To those who know how to use direct mail, this will not matter. They have proven ROI where revenue generated is not affected by a few cents.
Maybe instead of all of the printers and print industry organizations complaining, they should focus on providing a valued service that works.
The USPS is an arrogant government behemoth that needs to be reorganized from the ground up. Like any other governmental organization their way of balancing their budget is try to suck out as much cash as they can from their already cash strapped customers. They have not cut "dead wood" like any other business to remain profitable nor have they increased their service to justify any increases at any level. The USPS act as if the customers should work for them not the other way around.
The basic problem is print dying out across the board. The USPS hasn't responded to the situation by scaling back their capacity or trying to move into areas which have replaced print.
Why don't we see Fed Ex or UPS raising rates willy nilly?
As with any large bureaucracy over time, the primary goal of the USPS has become to insure their continued existence rather than fulfill the goal they were initially created to meet. This is especially difficult when the original goal is rapidly evaporating in the digital age.
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