DMA, PostCom, MOAA and PSA Ask US Postal Service to Delay Implementation of Standard Mail Rates

May 1, 2007 — In a letter to the Chairman of the US Postal Service, the Direct Marketing Association (DMA), the Association for Postal Commerce (PostCom), the Mail Order Association of America (MOAA), and the Parcel Shippers Association (PSA) asked the USPS Board of Governors to delay implementation of new postal rates for Standard Regular and Nonprofit Mail “until the later of July 15th or a reasonable time following the resolution of the Governors’ March 29 decision requesting reconsideration of the PRC-recommended rates for flat-shaped Standard mail.”

The four associations delivered the following letter to the USPS Headquarters on Monday.

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James C. Miller III, Chairman

US Postal Service Board of Governors

475 L’Enfant Plaza, SW Rm 10300

Washington DC 20260

Dear Chairman Miller:

This is to request that the Board of Governors act immediately to hold in abeyance all rate changes recommended for Standard Regular and Nonprofit Mail until the later of July 15th or a reasonable time following the resolution of the Governors’ March 29 decision requesting reconsideration of the PRC-recommended rates for flat-shaped Standard mail.

It has been reported that there is some question on the part of postal officials concerning the authority of the Board to delay rate adjustments on the grounds of “rate shock,” solely. We wish to make clear at the outset that, while “rate shock” is a matter of serious concern, this request finds its basis in more than simply the magnitude by which some PRC-recommended rates exceed those requested by the Postal Service.

As you and your fellow Governors noted in your in decision of March 19th, “…the much larger increase for flat mailers recommended by the Commission substantially increases the risk that a substantial portion of flat mail would disappear entirely rather than being converted to letters, with potentially serious adverse financial consequence on Postal revenue.” We share this concern over future volumes and meeting revenue needs of the Service.

We, as an industry, support the underlying rationale for relying more heavily than in the past on shape as a driver of costs and, therefore, rates. While the rates sought by the US Postal Service reflecting this shift were in some instances larger than mailers had hoped they would be, the magnitude of the increases subsequently recommended by the PRC for much of flat-shaped Standard mail was quite shocking and the cause of considerable consternation, especially in the catalog community. Thus, we were and are deeply appreciative of the thought given by the Governors to conversion problems as well as the probable shortfall in projected volumes and revenue that would result from the PRC-recommended rates.

We had hoped that this matter would have been resolved in advance of the May 14th date for implementation of rate changes. However, given recent procedural developments associated with a request to re-open the evidentiary record, it now appears unlikely that the PRC will complete its deliberations in time to avoid implementation of the damaging rates initially recommended by the PRC.

Consequently, if rates are changed on May 14th, Standard Regular and Nonprofit Mail users — and the Postal Service, as well — face the prospect of a second round of rate adjustments once those deliberations are completed and the Governors act. Two rounds of rate adjustments in fairly short succession will be costly, confusing, and will compound the negative effects of the initial large increase recommended by the Commission for flat-shaped Standard mail.

Although delaying implementation of all Standard Regular and Nonprofit Mail rate adjustments until at least the July 15th date previously selected for changes in periodicals rates will result in a modest loss of revenue for the Service prior to the commencement of the R2006-1 Test Year, we believe the long-term benefit of a stable Standard Regular and Nonprofit Mail customer base far outweighs any short-term financial losses for the Postal Service.

We urge the Board to act expeditiously on this request and thank you for your consideration.

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