With reason to believe that the USPS Board of Governors may vote on a potential exigency rate increase in early September, the Direct Marketing Association (DMA) has sent a letter to the USPS Board of Governors voicing our opposition to such an increase.
In the letter, DMA, as part of the Affordable Mail Alliance (AMA), expresses concern about the negative effects that would come with such an increase, especially for the mailing industry and its suppliers. The letter recognizes the continued financial struggles that confront USPS, but also states that an exigent rate increase is not the solution to those struggles.
With recent progress toward comprehensive postal reform in Congress, along with steady improvement in the USPS balance sheet, the letter stated that an exigency filing “at this point would be premature.” The letter additionally requested a meeting with the Board to discuss the issues at hand and to ensure that USPS is fully informed before making a decision of such great magnitude.
DMA recognizes that the mail channel is an extremely important and significant component of data-driven marketing. That is why we are asking our members to speak up against any action by the Postal Governors to raise rates above the current CPI cap.
For more information, please contact Jerry Cerasale, DMA’s senior vice president of government affairs.
The text of the letter follows:
August 21, 2013
The Honorable Mickey D. Barnett
Chairman, Board of Governors
United States Postal Service
475 L’Enfant Plaza SW
Washington, D.C. 20260-1000
Dear Mr. Chairman:
The Affordable Mail Alliance (AMA) understands that the Board of Governors will be considering a potential exigency rate increase on your conference call on September 5. The mailing industry, and its suppliers, responsible for $1.3 trillion in sales annually, and nearly 8 million private sector jobs, are unanimous in our great concern that, notwithstanding the Postal Service’s ongoing financial predicament, an “exigent” increase would cause severely adverse, and likely irrevocable, consequences for mail volume and revenue.
AMA believes an exigency increase would not only be profoundly ill-advised, but clearly self-defeating to recovering postal financial stability. Moreover, an exigency filing at this point would be premature, in light of recent progress in Congress, and a noticeable improvement in the USPS balance sheet. Therefore, we ask that you set aside consideration of an exigency increase at this time, and urgently request that you schedule a meeting with a representative group from the mailing and supplying industry before you make any decision.
Our industry is acutely and painfully aware of the challenges that confront USPS; no group “gets” the impact of technology on marketing and distribution by paper better. We have strongly advocated for legislative relief over the past several years. We have greatly appreciated, and cooperated with, your successful cost-cutting programs, as well as efforts to innovate on prices and products. Yet, we realize none of these steps, or all together, have been nearly enough to stem the ongoing losses you confront from diversion, the recession, and Congress’ inability to date to complete work on addressing needed financial and structural reforms.
Nonetheless, an exigent rate increase is not a solution to the agency’s financial issues or the profitability of certain classes of mail, and it could potentially alter the current level of focus on improving operations and infrastructure. Representing postage rate payers, we can assure you that any extraordinary rate increase—especially anything above the current CPI cap—would result in reduced mail volume, and, consequently, reduced revenue for the Postal Service. The internet and mobile technology have become, and will continue to be, the drivers of diminishing communications by paper. As a result, previously accepted views that the mail is price insensitive are no longer appropriate.
With the availability of highly effective and efficient marketing alternatives, any significant postage rate increase would change the ROI calculus by companies in comparing alternatives. That shifting ROI, in turn, would threaten the sustainability of our existing strategies and compel an industry-wide shift of
investment of communication and advertising dollars from mail to those alternative channels. This not only raises very serious questions about the accuracy of any claim that mail is price insensitive, but would significantly slow or stall any Postal Service recovery.
Recent financial reports from the Postal Service indicate that the efforts to streamline operations and infrastructure at the Service and the slow recovery rate of the American economy are having a positive effect on postal finances. An above-inflation postage increase will stall and likely reverse that effect. Rather than raise postage rates and risk loss of mail volume from your commercial customers who provide or generate approximately 90% of your revenues, we believe that the more prudent approach is to continue to support, and in our case vigorously advocate for, meaningful and comprehensive legislative reform from Congress, while you pursue your program to make operational improvements within the Postal Service itself.
An exigent postage increase would shift the focus and resources of our members from urging postal reform to contesting and, potentially, adjusting business plans to cope with such an increase through reducing our exposure to the mail. Moreover, an exigent increase would substantially relieve the pressure for legislation, a factor well understood in Congress. That would obviously lessen the likelihood of any helpful postal reform in the near term, and raise concerns in the industry about how quickly and easily USPS might turn to exigency increases in the future.
To reiterate, an exigent rate increase would be devastating to both the mailing and supplying industries, and the Postal Service. You and your fellow Governors are about to make a choice that could prove pivotal to the system, its finances, its customer base and suppliers, and the mailing public. A decision on this order of magnitude compels as fully informed guidance as possible.
Finally, we request a meeting with you to discuss these issues. We stand ready to meet with you at your convenience. Please contact James Cregan at 202-296-7277 or firstname.lastname@example.org.
Association Members of the Affordable Mail Alliance
Alliance of Independent Store Owners & Professionals
American Academy of Family Physicians
American Business Media
American Catalog Mailers Association
American Forest & Paper Association
Association for Mail Electronic Enhancement
Association for Postal Commerce
Association of Marian Helpers
Association of State Baptist Papers
Canadian Printing Industries Association
City & Regional Magazine Association
Coalition of Religious Press Associations
Continuity Shippers Association
Custom Content Council
Direct Marketing Association
DMA Nonprofit Federation
The Envelope Manufacturers Association
Financial Services Roundtable
Graphic Arts Association
Magazine Publishers of America
Mailing & Fulfillment Service Association
Major Mailers Association
Midwest Circulation Association
National Alliance of Standard Mailers & Logistics
The National Association for Printing Leadership
National Catholic Development Conference
National Newspaper Association
National Postal Policy Council
Pacific Printing and Imaging Association
Printing & Graphics Association MidAtlantic
Printing & Imaging Association of MidAmerica
Printing & Imaging Association of Georgia
Printing Association of Florida
Printing Industries Alliance
Printing Industries Association of San Diego
Printing Industries Association, Inc. of Southern California
Printing Industries of America
Printing Industries of Arizona/New Mexico
Printing Industries of Michigan
Printing Industries of Ohio – N. Kentucky
Printing Industries of St. Louis, Inc.
Printing Industries of the Gulf Coast
Printing Industries of the Midlands
Printing Industries of Utah, Inc.
Printing Industries of Virginia
Printing Industries of Wisconsin
Printing Industry Association of the South, Inc.
Printing Industry of Illinois/Indiana Association
Printing Industry of Illinois/Indiana Association
Printing Industry of Minnesota, Inc.
The Printing Industry of the Carolinas, Inc.
Promotional Products Association International
Reserve Officers Association
Visual Media Alli