Battle Intensifies Over Second 2021 Postal Rate Hike

 

Dear Industry Executive:

Based on what we know now, our guidance to members is to prepare for a rate increase ranging from 5% to 7-1/2%, taking effect in late summer. While ACMA has been pushing back on this is, USPS leadership is not interested in hearing that this will cause decreases in catalog and other mail volume. We have also taken our case to the Hill but too few companies are raising hell with Congress over this. Read the details and what to do about it in our full report.

Why Another 2021 Postal Rate Increase is Likely
At the most recent Mailers Technical Advisory Council (MTAC) meeting, and then again with the ACMA board last week, Postmaster General Louis DeJoy indicated that he plans a second rate filing in 2021. No amount has been specified, but in a recent unrelated filing to the Postal Regulatory Commission (PRC), the USPS said to expect an “above inflation rate filing” on or before May 28, which implies a rate increase on or before August 20, 2021.

If all available rate authority is used, this midyear increase could be north of 7%, including the 2% underwater surcharge for Marketing Mail Flats and Carrier Route. The worst case for our underwater mail is ~8.5%, but this assumes all rate authority being used and will mean no significant authority left for the January 2022 increase. It would then be hard for the PMG to claim he was judicious. Postal products not underwater will see up to a 5.5% hit if the USPS choses to use the full authority. The agency can do what it wishes with package pricing, but we expect a second “surprise” increase is likely here too.

Related to USPS 10-Year Plan
(Click here to read a mailing industry letter, co-signed by ACMA, to PMG DeJoy about his 10-year plan, which acknowledged the likelihood of a rate increase. Click here to read the PMG’s response. Click here to read ACMA’s summary for members of the 10-year plan.)

ACMA Continues Aggressive Defense
As you should be aware, ACMA has been on overdrive for months (i) exhausting all avenues of appeal with the PRC, (ii) lobbying the Postal Service against an unbudgeted increase in the middle of a pandemic, (iii) litigating this in the Court of Appeals, (iv) lobbying Congress for curative reform legislation and (v) encouraging “Dear Colleague” type letters to the PMG and the USPS Board of Governors to let them know that a second 2021 rate hike will be highly self-destructive. We have been collaborating with other mail associations and our industry coalition, the Coalition for a 21st Century Postal Service.

Mounting an aggressive response takes extraordinary resources. You have previously received our war chest funding request. To date, we have had 15 companies step up with pledges and contributions toward our Postal Action Fund, some merchants pledging in the 6-figure range. As encouraging as that may seem, we have secured only $350,000 in pledges to date. We have not heard from many companies. One ACMA member company has been nice enough to indicate they will not be funding. No non-ACMA member company has contributed or responded to date.

Just so we are perfectly clear: ACMA is not doing everything we could be doing to fight this. We are doing everything possible with the resource base we have received.

We are also trying to get every company engaged with Congress and are having some wonderful results as a few companies have been doing yeoman’s work on the Hill. (Click here for related update on recent success stories.)

How We’re Using Your Donations
Recall that the money being raised by ACMA serves several purposes. It funds our litigation in the U.S. Court of Appeals. It also enables ACMA to hire some experienced political consultants who specialize in keeping bad things from happening to entire industries.

This is where our digital and media campaign comes in. We hope to create compelling content and a response mechanism, then use “guerrilla” marketing techniques to efficiently drive engagement with your employees, customers, suppliers and members of the public we know are sensitive to these issues (particularly rural and older Americans).

Time Is Running Short
The window of opportunity to impact this is quickly closing. The USPS currently will file for a second 2021 increase in six short weeks. Unless we step up our game, at this point, the most likely outcome is another 2021 increase and upwards from there for both mail and packages for the next five years. Our original projection of 30% to 50% higher rates by 2026 looks more and more likely.

Please contact us today with (i) your financial pledge and (ii) your commitment to leverage your constituent standing to help us beat back on what could be a crippling action aimed directly at this industry.


Hamilton Davison
President & Executive Director
ACMA
hdavison@catalogmailers.org

 

About the Author: Jim Gibbs

Vice President of Sales & Marketing at The Dingley Press. Jim has been with Dingley since 2002 and lives in Maine near our Lisbon, Maine plant location.