SPECIAL EDITION: Postal Rate Recommendation Could be Catastrophic for Catalogers

The Feb. 26 announcement by the Postal Regulatory Commission (PRC) of its postal rate recommendations on the surface looked like good news for mailers. But a closer look at the rates for the various bulk mail subclasses exposes a number of potentially enormous rate hikes for a significant number of catalogers. The PRC recommendation is now in the hands of the U.S. Postal Service’s Board of Governors, who can either accept, reject or accept them under protest.

Although the PRC recommended an average rate increase of 9.3 percent for Standard Mail, the bulk mail category that most catalogers and other direct mailers use, a closer look beneath its recommendations exposes potential rate hikes as steep as 43 percent for some catalog subcategories. “For anyone who doesn’t mail letters, the news is all bad,” says Dave Crofoot, CFO for Johnson Smith Co., a Bradenton, Fla.-based multititle mailer of the Betty’s Attic, Things You Never Knew Existed, The Lighter Side and several other catalogs. He pointed to several instances in which bulk mailers of flats (oversized mail that includes most catalogs) would have to pay considerably more than bulk letter mailers.

Eye on ECR Rates

Specifically, Crofoot points to the PRC recommended increases for Standard Mail enhanced carrier route (ECR), one of the most used classes among piece rate mailers. Per the PRC recommendation, that rate would go up between $0.08 and $0.16 depending on how deeply mailers enter the postal delivery system. “And that’s above and beyond the increase proposed by the USPS,” he points out.

Perhaps most alarming, Crofoot says is the ECR rate for mail that’s entered into postal sectional center facilities (SCFs). The current rate is $0.171; in its original rate filing, the USPS had proposed a 16.4 percent increase to $0.199. But although the PRC actually recommended a lower overall average increase of 14.7 percent, part and parcel of that are its recommendations for flats vs. letters: Although the PRC wants to see the ECR to SCF rate for letters increase just 7.6 percent to $0.184, its flat rate recommendation is for $0.207, a whopping 21 percent hike, Crofoot points out.

Among other catalogers I spoke with about this development, Herrington, a Londonderry, N.H.-based cataloger of personal recreational gadgets, anticipates its rates would rise 19.8 percent if the PRC recommendation goes through. “I am extremely disappointed in the recommendation, not only in terms of the increase but in the timing,” says president/COO Norm Beauchesne.

He calculated this increase “despite using all possible work-share discounts possible. Given that postage is by far our largest expense,” Beauchesne adds, “our CPM will increase significantly. As a result, I’m expecting some significant changes in our circulation strategy.”

Smaller catalogers, who don’t mail great enough quantities to gain carrier route rates, could get hammered even worse, Crofoot says. The USPS requested that the 3-digit sort automated rate, which is currently $0.275, be raised 19 percent to $0.328, but the PRC recommends that rate balloon to $0.392, a 43 percent jump.

Call For USPS Rejection

Crofoot and others are part of a campaign among catalogers, printers and other suppliers to get the USPS to reject the PRC recommendations.

“We’re working with a group of printers to build a significant voice of advocacy,” says Mike Talbott, vice president, business development for CMS Direct, a marketing services firm that owns the Prefer Network co-op database service. Talbott believes that if the USPS is sympathetic to catalogers’ and their suppliers’ protests, the likely outcome will be an “accept under protest” verdict, which would mean the rates being implemented per the PRC recommendation.

“That would mean we take a hit in May,” the expected month for new rates to be implemented, he says, “and start a fight to get this extra hit back.

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