Possible Exigent Rate Increase?
There has been talk lately of the USPS requesting an exigent postage rate increase from the Board of Governors.
What is an “exigent” postage rate increase?
The current law is that postage rate increases are tied to the Consumer Price Index. The rates increases we have seen annually over the past few years fall into this category. While no one particularly likes an increased cost (although USPS remains the best bargain for mail worldwide), tying it to CPI makes budgeting fairly simple.
Merriam-Webster’s dictionary defines exigent as “requiring immediate aid or action” or “requiring or calling for much”. In the case of the Postal Service, this is a request for a postage rate increase above the CPI when there are extraordinary circumstances.
What are the extraordinary circumstances? Uncertain or lack of postal reform certainly plays into it, along with continued financial losses. In addition, the USPS has made efforts at internal cost containment. Is it enough?
The Direct Marketing Association (DMA) reports in its Direct from Washington newsletter:
With reason to believe that the United States Postal Service (USPS) Board of Governors may vote on a potential exigency rate increase in early September, the Affordable Mail Alliance (AMA), including the DMA, sent a letter to the Governors voicing their opposition of such an increase. The letter expressed concern about the negative effects that would come with such an increase, especially for the mailing industry and its suppliers. The letter recognized the continued financial struggles that confront USPS, but also stated that an exigent rate increase is not the solution to those struggles. With recent improvement in the USPS balance sheet, the letter stated that an exigency filing ‘at this point would be premature’.
Strahm will keep our customers up-to-date with decisions and potential rate increases.