Direct Marketing Association Strongly Opposes USPS Request for Rate Increase

Press Release from the Direct Marketing Association Inc.:

Washington, DC, July 6, 2010 — The Direct Marketing Association (DMA) strongly opposes the United States Postal Service’s (USPS) request for a rate increase.  In its presentation today to business mail customers, USPS said that mail volume declined by 36 billion pieces (or 17 percent) between 2007 and 2009.  DMA strongly believes that a postal rate increase at this time will cause mail volumes to decrease even further, and irreparably harm the financial viability of the Postal Service going forward.

“We question the need for a rate increase at this time, and strongly believe that it will further damage the economic viability of the Postal Service,” said Linda Woolley, DMA’s executive vice president for government affairs.  “The increase is not in the public interest, and ultimately, would have a devastating effect on any economic recovery since marketers rely heavily on mail to deliver offers, as well as products, to customers.”

The Postal Service’s rate increase request proposes to raise rates an average of 5.6 percent, but in order to reach that average, the increase on some mailers will be dramatically higher.  The proposed increase for small parcels, for example, is 23.3 percent, something that would be devastating to many companies.  A rate increase would force business mailers to look for alternative methods of communications.

These increases will hasten efforts by mailers to shift to other channels of communications. 

DMA strongly questions the assumptions underlying the Postal Service’s request for a rate increase, namely that it will generate some $2.3 billion in new revenue over a 9 month period.  In the period following the last rate increase in May 11, 2009, in the next year, mail volume decreased by an additional 5 percent (above the previous 13 percent) and DMA strongly believes that this new increase would have the same, if not a more dramatic, effect, and drive away even more business mail, which accounts for some 85 percent of the Postal Service’s revenue. 

 DMA strongly supports a vibrant and fiscally sound Postal Service, and believes that there are many ways for the Postal Service to get its financial-house in order without an increase in postal rates.  On many occasions, the Postmaster General has said that there is excess capacity in the system, and that there may be opportunities to downsize the system and the labor force.  In addition, there are new product lines and business opportunities that the Postal Service can and should pursue, most of which were outlined in the Postal Service’s 21st Century presentation on March 2, 2010.

The Postal Regulatory Commission (PRC) has 90 days to review the USPS rate increase request. DMA will strongly oppose the request at the PRC, and make its views known before Congress.