Proposal for Massive Postal Rate Increases Would Reduce Mail Volume and Undermine Stability of Postal Service, Leading Mailers Argue
Groups Support Balanced Approach to Postal Ratesetting
Washington, D.C., March 5, 2020 - A proposal that would massively increase postal rates would reduce mail volume and undermine the stability of the U.S. Postal Service, according to a coalition of the Postal Service’s largest, longest-tenured, and most loyal customers. The coalition asked the Postal Regulatory Commission to withdraw the proposal, preserve the inflation-based price cap as required by law, and focus on solutions that will actually lead to a more efficient and successful Postal Service.
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 Continuity Shippers Association, and the Saturation Mailers Coalition submitted the joint comments. The Commission’s proposed rulemaking began as a required review of whether the Commission’s current system of rate regulation is achieving the objectives set by Congress in the Postal Accountability and Enhancement Act but its current proposal moved away from the law’s objectives and would eliminate the incentive provided by the inflation cap for the Postal Service to operative efficiently and improve productivity. The proposal would authorize a cumulative 41 percent rate increase on magazines and periodicals over five years that will cost mailers about $8 billion per year.
“Instead of dramatically increasing mailing costs, the Commission should refine the system of regulation in ways that will encourage the Postal Service to be more innovative, more efficient, and more effective,” said Brigitte Schmidt Gwyn, CEO of MPA. “Most importantly, the Commission must recognize that postal ratepayers must be protected, not only for their own sake, but for the long-term prospects of the Postal Service itself.”
“Because the Postal Service is a regulated monopoly, Congress enacted a system of regulation to protect mailers from the abuse of that power, including limiting excessive rate increases and service declines, while providing incentives for the Postal Service to reduce costs and operate efficiently,” said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers and a former senior executive of the Postal Service. “The current system of ratemaking has allowed the Postal Service to maintain financial stability, and with smart management actions and sensible regulation by the Commission, maintaining the inflation price cap mandated by Congress will provide the Postal Service with the best opportunity to improve its financial position going forward.”
“This proposal’s reliance on excessive price increases fails to require the Postal Service to pursue solutions that any non-monopoly business would implement, including right-sizing its operations, abandoning wasteful investments, providing better quality service, restructuring pricing and discounts, and offering products better suited to its customers’ needs,” said Michael Plunkett, President and CEO of PostCom and past senior executive at the Postal Service. “If the Postal Service had simply limited its cost growth to the average growth in costs throughout the economy, it would have earned a profit in the era following enactment of postal reform legislation.”
The coalition also submitted comments last month outlining their opposition to the proposal. The comments were supported by expert declarations from several economists and declarations from several nonprofit organizations.