By David Pilcher, Freeport Press

If you’re a commercial mailer of flats and periodicals, brace yourself. Customers are facing an unexpected and steep increase in USPS mailing rates sometime this summer — even while service standards remain miserably low.

The first indication that something was seriously wrong with operations at the USPS came last July, when newly appointed PG Louis DeJoy changed trucking regulations. On-time mail deliveries plummeted. It was so bad that a Washington DC District Court judge ruled they must reverse the changes in October and file daily paperwork with their progress.

Then came the election, and the massive challenge of timely delivery of mail-in votes. Finally, we wrapped up the year with a disastrous holiday mailing season (at a friend’s home, seven-holiday catalogs appeared on the same day in her mailbox … in mid-January) and stories of missing or delayed Christmas gifts continued well into this year. 

According to Bill McAllister writing in Linn’s, data shows that mail service overall — including first-class mail — is performing dismally.

Now, the Postal Regulatory Commission (PRC) tells us to expect an additional rate increase this summer of anywhere between 5.5% for first-class and up to 7.5% for marketing flats and periodicals.  (That’s on top of recent rate changes that went into effect last month.)

The news is part of the PRC’s Annual Report FY 2020, released last week to the President and Congress. At 62 pages, the report is dense and covers required PRC review of the 2006 Postal Accountability Enhancement Act (PAEA) that took four years to put together.

The bottom line? The USPS has been given new rate setting authority, and they plan to take full advantage of this. Future rate increases will be allowed to based on Consumer Price Index changes, density issues (a cost-per-piece rating), retirement funding rate, plus 2% for non-compensatory classes (underwater products like marketing mail flats and parcels, carrier route mail and periodicals).

What does this mean for USPS customers?

From the 2020 Annual Compliance Report (ACR) the USPS estimates the density factor to be 4.5% and the retirement authority to be 1.062%; if the PRC agrees with these figures when they publish the ACD (Annual Compliance Determination report) in March or April the USPS may announce a rate increase with 90 days’ notice.

This means the postage payer may see a postage increase in summer 2021 of up to 5.56% (4.5% density + 1.062% for retirement). For underwater products such as Marketing Mail flats and Periodicals, the possible rate increase may be up to 7.56% due to the 2% allowed for non-compensatory.

This increase would be on top of the 1/24/2021 rate increase of approximately 1.45% on Periodicals, 1% on letters, and 3.5% on Marketing Mail flats & CR. 

We must act. Now.

Several mailing associations, including the ACMA, have filed with the PRC to request a stay order; there’s no expectation that the PRC will grant it, but any denials of stay will be appealed in court. 

We encourage you to become involved with industry associations that are working to turn this decision around.  Efforts need to be focused on litigation, government relations, public relations and grass roots campaigns to educate the general public and mailing consumer about the immense impact this could have on a vital industry that makes up over 7% of the GDP.

Associations included in the filed suites:

The USPS cannot be allowed to operate with impunity, especially given its performance this past year. Simply put, too much of our economy and our way of life depends on standards of delivery … and raising rates provides absolutely no guarantee that service will improve. 

Make your voice heard and make a stand for accountability at the USPS.

Serious Questions Around the USPS and Rates originally appeared on the Freeport Press blog. Published with permission from Freeport Press.