ABM Postal Counsel: Average periodical rate will increase 2.56% in 2013

Widener also comments on the news that USPS hit its borrowing limit for the first time in history.

Jack Widener

Oct. 17, 2012 -- In an email this week, Jack Widener, ABM’s postal counsel, advised that the Postal Service filed price changes for 2013 with the Postal Regulatory Commission, including an overall price increase of 2.56 percent for periodicals. The increase, pending approval, will take effect on Jan. 27. Widener notes that a publication’s actual increase will vary due to the more than 100 rate cells used to determine periodical postage (many cells receive different percentage increases).

Periodicals consist of two subclasses. The first subclass includes Outside County publications (increasing, on average, 2.55 percent), which Widener says most ABM members fall into. The second subclass includes Within County publications (which will report a 2.91 percent increase). To qualify for Within County rates, a publication must publish less than 10,000 copies or have more than 50 percent of its circulation distributed within the county of publication. Within County revenues account for only about $70 million of the $1.8 billion in periodical revenues.

“The Postal Service, in its rate filing to the Postal Regulatory Commission, recognized the value of periodicals to the public,” says Jack Widener. “They went on to say that in spite of being underwater (not covering its costs) the Postal Service was cognizant of periodicals’ value to the public when making its pricing decisions.”

The USPS is encouraging efficiency and containerization. Widener notes that smaller publications have more challenges using containerization, such as pallets, but says “USPS is being sensitive by keeping rate increases within a reasonable level for smaller publications who can’t fully utilize those efficiencies.”

In his email, Widener detailed the following:

•   USPS is encouraging drop shipping and discouraging mailing into the most distant zones. Members using origin entry pallets and mailing to zones 7 and 8 might see a higher- than-average increase. Reviewing and optimizing drop shipping is advised.

•   Many publications that are highly carrier route sorted will realize a higher than average increase. 

•   Sack mail rates received a less-than-average increase, which ABM members and smaller publications tend to use more.

•   Origin entry pallets received a higher-than-average increase, which smaller publications tend to use more (compared to larger publications).

•   The charge for repositionable notes on front and back covers has been eliminated.

Widener says the industry must continue to work with the Postal Service to promote efficient processes. It must also advocate that cost increases continue to be at a reasonable level for all publications. He encourages companies to share analysis with ABM that can be helpful in understanding impacts for members. 

USPS also announced that it has hit its borrowing limit, totaling $15 billion, for the first time ever. The agency says it will have to rely on revenue from stamps and other products to fund operations.

Widnener notes that this was not a surprise, and the Postmaster General predicted this turning point.

"He  took that into account when he told customers during the summer that the Postal Service would continue operations into next year even without congressional action," says Widener. "It does take away a source of operating funds though, and reduces any cushion the USPS has. From what we hear, they are down to a “few” days of operating cash, which they also knew. One of the key considerations will be the strength of the fall mailing season. A strong season would allow them to increase their cash reserves. We don’t have actual revenue figures yet for September, but have heard the volume of political mailings is better than anticipated."

By Elizabeth A. Reid