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What Can We Expect From the 2012 Rate Adjustments? Part I

On October 18, the USPS® issued the anticipated filing with the Postal Regulatory Commission (PRC) for rate adjustments to market dominant mail and services that will take effect on January 22, 2012. This filing calls for a standard Consumer Price Index (CPI) increase, and includes elements that I expected, and others that I did not.

The Expected

First and foremost, the CPI increase is predictable. On the surface, it is a relatively straightforward adjustment across the mail classes, and should not have a major impact on printers’ and mailers’ profit margins. These are not the heavy handed increases that some might have been expecting, especially in regard to classes that are arguably not covering their attributable costs. While the Postal Service™, given their current financial circumstances, would have certainly been justified in filing an exigency rate case, I am glad that they did not. Marked increases in mail class rates would run a potential risk of driving away customers, and have long been a major concern for printers and mailers regarding what they believe would be a negative impact on the success of their businesses.

What does the USPS plan to do in lieu of excessive rate increases to cover costs and increase revenue other than the proposal they submitted? As hoped, they will continue to urge Congress to make public policy adjustments to mitigate the Postal Service’s anticipated losses and provide them with the flexibility they need to get back on track. In particular, this includes returning some (preferably all) the overpayment of the pre-funded retiree healthcare coverage. The USPS is also anticipating the President and Congress to support the five-day delivery request that in itself could save the USPS over $3 billion.

Stay tuned to read about some elements that were unexpected in the 2012 Rate Adjustment. Until then, you can review some of the expected changes in the BCC Solutions November eBulletin.