DMA Politically Direct (Winter 2008): DMA Helps Members Prepare for 2008 Postal Rates

March 5, 2008 — The US Postal Service on February 11 announced rate adjustments for market-dominant mailing services (First-Class Mail, Standard Mail, Periodicals, Package Services, and Special Services) that will take effect May 12, 2008. Price changes for Priority Mail and Express Mail are expected to be announced later this month.

The USPS also announced that it was revising rates and mailing standards for First-Class International Mail services to reflect current First-Class Mail domestic shape-based standards. These changes also will take effect on May 12.

Commenting on the 2008 postage increases, Direct Marketing Association (DMA) Senior Vice President of Government Affairs Jerry Cerasale said, "DMA is pleased that these postal rate changes do not portend the time-consuming and costly litigation of an old-style rate case."

Under the Postal Accountability and Enhancement Act (PAEA), the USPS’s rate adjustments for market-dominant classes must be at or below the rate of inflation as measured by the Consumer Price Index (CPI) on average at the class level.

The new Standard Mail rates are in compliance with this provision with an average rate increase of slightly less than 2.9 percent, which is equal to the rate of inflation during the last 12 months. Also, the USPS announced lower pound rate charges for Standard Mail saturation and high-density flats.

"The Postal Service now has the flexibility within the overall inflation cap to charge rates based upon market factors," Cerasale continued. "With the significant drop in mail volume for flat-shaped Standard Mail in the first quarter of its 2008 fiscal year — a reported 13 percent drop compared to the same quarter in its FY 2007 — the Postal Service has chosen to keep the new rates for this type of mail generally below the rate of inflation in order to try to stem future decline in that mail volume."

What next? Under new ratemaking regulations, the Postal Regulatory Commission (PRC) has 45 days during which to review the USPS rates to ensure their compliance with the PAEA. The public may submit comments during the first 20 days of this review period.

Since President Bush signed the postal reform bill in December 2006, DMA has played a prominent role in ongoing discussions at the USPS and PRC. DMA also will continue to assist both agencies they implement portions of the landmark PAEA.

On February 29, DMA hosted a virtual seminar at which its Government Affairs team and key USPS and PRC staff briefed members on the new rates.

DMA also provides members with an online library of postal information, including the new domestic and international rates, at www.the-dma.org/postal.

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