How Postal Reform Will Affect Direct Marketers

The Postal Accountability and Enhancement Act, which President Bush signed into law yesterday (Tuesday) resolves many issues of importance to direct mailers, while leaving some unanswered questions.

Transparency and accountability within the USPS are the main areas that need work, according to Gene Del Polito, president of the Association for Postal Commerce, writes DM News.

The USPS no longer has the revenue requirements in current rate case that it once did, because the military pension and escrow were removed from the law, and some fear that the postal service, to make up for that, will make one more rate case filing under the current system, which is has the right to do.
For direct marketers, the law means that future rate increases will be smaller, that new products will roll out more easily, but that postage rates in May will still go up, reports MarketingSherpa. The average increases planned for the spring are: Standard Mail, 9 percent; First Class, 7.1 percent; Priority Mail, 13.8; Express Mail, 12.5 percent; Package Services, 13.4 percent; Periodicals, 11.4 percent.

The law is the first major change to the USPS since 1971. Major changes include the fact that it transfers responsibility for military service benefits payable to postal retirees to the Department of the Treasury, and that it eliminates the requirement that the USPS pay $3 billion annually into an escrow account. That escrow account was partially what drove the three-cent increase in stamp prices this year, and is what will help keep postal rate increases in check.