Big increases in USPS postage rates could be coming

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Washington Postal Scene by Bill McAllister

After winning a multi-million dollar relief package from Congress, is Postmaster General Louis DeJoy about to embark on a series of major postage rate hikes?

That’s what the leaders of two of the largest direct mail organizations are warning their members about.

Blame the sudden spike in inflation, a Postal Regulatory Commission ruling last year, and DeJoy’s vow to use all the rate-raising authority at his disposal for the possibility that postal rates could spike. up to 18% to 20% over the 18 months between January 2021 and July 2022.

“Nothing like this has happened before,” said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers.

Kearney predicted that what awaits us immediately in April is a request for a rate increase by the United States Postal Service from 6.5% to 8.6% on mail which will take effect in July.

Add to that the likelihood that shippers will face another rate hike in January 2023 under a plan of semi-annual increases created by DeJoy.

Michael Plunkett, president of the Association for Postal Commerce, is also concerned about the impact on its members.

“Available fare authority has been determined and I agree with [Kearney]. We expect the USPS to use all of this, regardless of necessity or consequences.

David Partenheimer, a spokesman for the Postal Service, declined to comment on speculation about the rate increase.

In response to an appeal from the Postal Service, a federal appeals court last year approved a rate case that allows the USPS to blow up the old consumer price index that limited postage rate increases to a maximum equal to the rate of inflation.

Before Congress approved major Postal Relief legislation in March, Kearney said, “We were told by the USPS that they planned to use full authority.”

“They didn’t back down,” he added.

A former senior Postal Service executive, Kearney noted that the President’s appointed Postal Service Board of Governors will have to approve any rate changes before they are submitted to the Postal Regulatory Commission.

“It’s time for them to exercise some wise leadership,” Kearney said.

The nine-member board still has five governors appointed by former President Donald Trump who have expressed loyalty to DeJoy.

Trump-appointed governors have also voiced support for the postmaster general’s 10-year mail plan, Delivering for America, which calls for rate increases to help erase Postal Service deficits.

President Joe Biden, who has not been happy with DeJoy, has two other appointees to the Board of Governors awaiting Senate confirmation. But they might not be seated until April, when the USPS is expected to announce the next rate hike.

Kearney told the USPS that “they must use the option to defer at least some of the authorized rate increases.”

The agency doesn’t need all the money that a postal rate increase might bring, Kearney said.

The USPS is sitting on $24 billion in cash, received $10 billion in COVID-19 pandemic relief from Congress, and will benefit from the just-enacted Postal Service Reform Act of 2022. , Kearney said in a March 11 alert to its members.

“The USPS could decide on some moderation in the use of authority, if for no other reason the agency will receive feedback from Congress if not,” Kearney also said in the statement. alert of March 11.

Kearney said alliance members were already making plans to deal with significantly higher rates.

The Mercy Home for Boys and Girls in Chicago is an example he cited.

This year, the charity has budgeted about $3.5 million in postage for its direct mail campaign, said Lynn Story, director of direct marketing for Mercy Home.

“That equates to 19% of all the money we currently spend on direct care for our children,” Story said.

“If costs increase twice a year for the next 5 years as suggested and the PRC uses its full tariff authority, Mercy Home will spend 29% of its program budget on postage alone,” she said. .

“The situation as it stands is a very real threat to the future of the nonprofit industry,” Story said.

Kearney agrees and says it’s up to the board of governors to decide.

“If they use full authority, that will expedite discussions, and plans are already underway at nonprofits to reduce their use of USPS,” he said.

“The 24 billion dollars that they [USPS] are now gaining 1% or less, which translates to a negative real return after inflation,” Kearney said. “Nonprofit organizations can do a lot more good with their money than having it wasted in a government account.”

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