Groups Support Balanced Approach to Postal Ratesetting

Washington, D.C., February 5, 2020 - A coalition of the U.S. Postal Service’s largest, longest-tenured, and most loyal customers has submitted comments asking the Postal Regulatory Commission to reject a proposal that would impose massive postal rate increases above the inflation cap mandated by Congress. The groups note the proposal’s failure to fully address Congressional objectives for the Postal Service and express concern that the proposal’s price increases will accelerate volume declines, negatively impacting the Postal Service’s financial condition.

The Alliance of Nonprofit Mailers, the Association for Postal Commerce (PostCom), MPA-the Association of Magazine Media, the American Catalog Mailers Association, the Direct Marketing Association of Washington, the Nonprofit Alliance, the Envelope Manufacturers Association, the Saturation Mailers Coalition, and the Continuity Shippers Association submitted the joint comments. The groups argue that the Commission’s proposals are illegal because the Postal Accountability and Enhancement Act does not permit it to grant above-inflation rate authority to the Postal Service. The proposal would authorize a permanent 41 percent rate increase over five years that will cost mailers about $8 billion per year.

“The Postal Service’s continued health depends on its customers. MPA’s members, who mail almost 90% of their magazines through the U.S. Postal Service, want the mail to work,” said Brigitte Schmidt Gwyn, CEO of MPA. “Through our joint comments with America’s largest mailers, we are sending a clear message that we support the balanced approach to postal reform enacted by Congress and oppose this proposal which threatens to harm the stability and viability of the Postal Service.”

The commenters note that the proposal would undermine the ability to achieve several objectives outlined by Congress, including maximizing incentives to reduce Postal Service costs, creating predictable and stable rates, and maintaining just and reasonable rates.

“The Commission’s proposal would radically change a rate system that it and Congress have recognized was designed to provide predictability and stability to mailers and to incentivize the Post Service to cut costs,” said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers and a former senior executive of the Postal Service. “We urge the Commission to abandon this proposal because it fails to deliver on these essential objectives.”

The proposal’s excessive rate increases will exacerbate volume losses, potentially depriving the Postal Service of the very revenue that the Commission hopes to provide and threatening postal jobs. The groups also take issue with aspects of the proposal that would grant the Postal Service more pricing authority as volumes decline, triggering a death spiral of the Commission’s doing.

“As a matter of good public policy and common sense, it cannot be that the solution to declining volumes and uncontrolled costs is to design a system that will drive volumes further down while substantially reducing the incentives for cost-cutting,” said Michael Plunkett, President and CEO of PostCom and past senior executive at the Postal Service. “These new proposed rules are not what mailers want, not what the Postal Service needs, and not what the Commission can legally or rationally implement.”

The coalition’s comments are supported by expert declarations from several economists and declarations from several nonprofit organizations.