Periodicals, Standard Postal Rates
to Jump at Least 4% in May

Publishers can count on seeing periodicals, standard mail and first-class postal rates increase by approximately 4% in May—and that's the best-case scenario.

The 4% hikes are the averages, based on the Postal Regulatory Commission's announcement last week that the Consumer Price Index increased 3.8% in 2008. By law, the CPI now serves as a cap on USPS price increases for "market-dominant" classes of mail.

Expected U.S. Postal Service rate design changes should work to even greater advantage this time around for large-circulation publications that can drop-ship on pallets and sort finely, and smaller publications that co-mail to achieve the same objectives. These publications should see increases at or below the 4% average. Those that do not drop-ship, and those that use sacks, are likely to see considerably higher increases.

It's possible that the USPS may also increase the minimum number of pieces in a carrier-route bundle from six to 10, which could cost some publications two cents per copy.

On the plus side, the Postal Service's consolidation of carrier routes will mean that some copies will move from 5-digit bundles to carrier-route bundles, representing a savings of 10 cents per copy. Publications that already have 25% to 75% of pieces in carrier-route bundles will realize the greatest benefits. If the number of carrier routes were reduced by 10% (the extent of the routes’ consolidation is as yet unknown), these mailers could up their carrier-route sortation by five percentage points, yielding savings of about a half-cent per piece or approximately 1% to 2% of total postage.

A remote worst-case scenario is that, to cover the significant gap between true USPS periodicals costs and the revenue they generate, the PRC could instruct the USPS to "pierce" the price cap. In that event, periodicals could get hit with an average hike of more than 20%, American Business Media postal counsel David Straus told Audience Development. However, Straus stressed that he does not expect this to happen.

On the standard mail front, the carrier-route consolidation savings will be smaller because their incentives are smaller. In addition, there's speculation that the USPS, which has lost significant volumes of catalogs as a result of previous large hikes on standard flats, may elect to avoid another big hike for flats by instead raising rates for standard letters more than 4%.