Several direct marketing and publishing bodies have agreed to a settlement plan put forward by the US Postal Service, leading to an increase in mailing rates on June 30 in return for price stabilization until 2003.
Although the deal cuts short the tortuous appeals process, introducing the rate rises two months earlier than originally planned, marketers hope it will prevent a more hefty increase later.
In September, the Postal Service board of governors proposed a 3% rise in the price of first class mail to 37 cents, with marketers required to pay 7.3% more for ‘standard mail’ and publishers 10%.
Initial opposition to the increases – the third in little over eighteen months – became muted in the wake of the anthrax scare, with many fearing an even higher rate hike would be imposed to recoup lost postal revenue.
“We understand that the economic situation has changed and we know they need additional money,” explained the Direct Marketing Association’s senior vp Jerry Cerasale. “We feared that if we didn’t settle, instead of facing an 8% hike in June, we could be facing a 12% to 15% rate hike in September.”
Such sentiments were echoed by Jim Cregan, executive vp of the Magazine Publishers of America: “We think in light of all the circumstances, it is fair and justifiable. It was pretty clear that the Postal Service intended to update its data [if mailers didn’t agree] and the result would not have been good for us or any other mailing organization. The bottom line is we would have gone up another 5% or 10%.”
The settlement scheme, suggested by postmaster general John E Potter after Christmas, is still to be approved by the Postal Rate Commission, which said it would accept comment on the compromise until January 18. It is not yet known if any major mailers or consumer groups oppose the agreement.
News source: AdAge.com