Top US Postal Service customers have condemned plans for large-scale price increases and havelaunched a joint campaign to lobby against them.
The US Postal Service unveiled plans earlier this week to raise prices for most of its letterproducts and services by 4-6%, delivery of magazines/periodicals by 8% and parcels by 23% tocompensate for slumping revenues caused by falling volumes. The prices, which require approval bythe US regulator, the Postal Regulatory Commission (PRC), would apply from January 2011onwards.
The US postal operator justified the above-inflation increases by the combination of the “unprecedented volume loss” and the continuing electronic substitution of printed mail, and saidthey would generate an additional $2.3 billion in revenue to partly compensate for an expected $7billion loss in the 2010/11 fiscal year (ending September 2011).
But the Direct Marketing Association (DMA), representing large US corporate mail users,denounced the price increases, which it said would average 5.6%. It described the 23% increase insmall parcel prices as “devastating” for many companies. Customers would simply be driven to switchfaster to other communication channels, it predicted. The DMA said it strongly believes that apostal rate increase at this time will cause mail volumes to decrease even further, and irreparablyharm the financial viability of the Postal Service going forward. Instead, the USPS should focus onreducing operating costs, and introducing new product lines and seeking new business opportunities.
“We question the need for a rate increase at this time, and strongly believe that it willfurther damage the economic viability of the Postal Service,” said Linda Woolley, DMA’s executivevice president for government affairs. Woolley added that “the increase is not in the publicinterest, and ultimately, would have a devastating effect on any economic recovery since marketersrely heavily on mail to deliver offers, as well as products, to customers.”
To campaign against the price increase, the DMA has teamed up with other US postal customerorganisations to form the Affordable Mail Alliance. The new coalition includes charities, large andsmall businesses, American household names and the customers who use the Post Office every day, theDMA said.
“Rather than gouging its customers with rate increases that are 10 times the rate permissibleby law, USPS should be eliminating its operating costs; inflation in postal costs was over 6% in2009,” said Jerry Cerasale, senior vice president, Government Affairs and Spokesperson for theAffordable Mail Alliance. “They should be making the hard business decisions and not raisingrates.”
“This proposed rate increase amounts to another tax imposed on Americans at a time when theeconomy can least afford it,” added Tony Conway, executive director of the Alliance of Non-profitMailers and Spokesperson for the Affordable Mail Alliance. “Consumers everywhere will paymore for the letters and packages they need to send; struggling businesses – large and small – willsuffer and even more jobs will be lost.”
The USPS had done little to reduce operating costs in response to the business decline, thealliance claimed. Labour costs only dropped 1% last year, leaving many USPS employees “under-usedor sitting idly”, the alliance stated.
