It should come as no surprise that postage pricing is expected to increase in early 2018. What is surprising is that mailing promotions that have been used in the past to offset postage increases may not happen in 2018.

By law, the USPS can only raise prices on its market-dominant products, such as first-class mail, advertising mail, and magazines, by the same rate as the annual growth in inflation. Since the year 2000, first-class postage rates have increased nine times, raising the cost to mail a first-class letter from $.34 to the current $.49.  As 2018 direct marketing budgets are drafted, this newly anticipated postage rate increase should be included.

The USPS has stated that an inflation-based price adjustment request will likely be filed with the Postal Regulatory Commission (PRC) by early October 2017. If the request is granted, the adjustment will take effect on January 21, 2018. The average increase is expected to be about 2%. Increases to individual rate categories are expected to range between 1% and 3%. The USPS may continue to narrow the pricing gap between origin-entered and drop-shipped mail, which may also result in higher rates for SCF-entered Marketing Mail letters.

There is the possibility that both the PRC rate and regulatory review and any potential postal reform legislation could influence pricing in the later part of 2018 as well. However, neither is expected to be completed in time to have any effect on the January rate adjustment, and postal reform legislation typically moves slowly.

Additionally, the USPS cannot begin implementation of any postal promotions until at least one Governor is nominated by the President for a seat on the USPS Board of Governors, and that nominee is confirmed by the Senate.  The Senate has been delaying or halting Governor confirmations for years resulting in nine vacancies on the 11 member Board. The two current members are the USPS Postmaster General and Deputy Postmaster General.  Since neither of these are appointed Governor positions, the Board presently lacks an appointed Governor.  This makes it highly unlikely that there will be mailing promotions in 2018.

Postage is a significant portion of direct marketing budgets, often comprising close to half of the cost. Postage increases often mean scaled-back marketing campaigns. Specialty Print Communications (SPC) understands the need to mitigate our clients’ postage spend and we have the expertise to do so through the use of 4-Color Variable Print, Tabled Laser Copy, Commingle, Copalletization or Destination Entry Mail Delivery. While news out of USPS might not be great, SPC’s focus on lessening postage costs will continue to allow our clients to stretch their mailing budgets and expand their marketing campaigns to their fullest potential.

 

Randy Weiler
Director Postal Affairs and Logistics

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