Postmaster General Jack Potter reaffirmed today that DMers would not see another rate increase until “well into” 2004.
He pushed the idea of “phased rate increases” during the opening session saying that large one-time rate increases wreck havoc on marketers. Phased rates would be implemented over certain time periods allowing marketers to better actively plan budgets, mail circulation and other processes related to direct mail. Within the USPS’s proposed transformation plan, the service has requested greater flexibility to employ phased rates, he said.
“We are not waiting for change to come to us,” Potter said.
Potter acknowledged that the postal service continues to operate “within a fundamentally flawed business model”. He remained very optimistic about the short-term health of direct mail and DM, but said that for the long term there needs to be significant change for the USPS to a more modernized system. He pointed to the transformation plan, drafted last spring and encouraged all marketers to read it. (It is available at the USPS’s Web site, http://www.usps.gov The overall plan calls for forming a core business to process and deliver America’s mail, he said.
Four short-term goals for the service are to reduce costs, improve services, make change in the rate making process and enhance products and services. Ongoing cost reductions have included the reduction of career employees by 23,000, cut backs in expenses across the board and a freeze on capital expense projects. Overall, the postal service pulled $2.9 billion in costs from its bottom line in fiscal 2002 and expects to post net income in 2003, factors contributing to marketers not seeing another rate hike until 2004, he said.
He said facilities in Trenton, NJ and the Brentwood facility in Washington, DC, remain closed following the anthrax attacks in the mail that killed two postal employees.
During a question and answer session following Potter’s talk one attendee questioned if large direct mailers, like Capital One, which has a negotiated service agreement with the USPS, have an unfair advantage when it comes to negotiating postage discounts. Potter said that “If it wasn’t for the larger mailers, smaller mailers’ rates would be much higher”.
Capital One, the postal service’s largest end user of First Class mail, is negotiating a higher discount for First Class letters provided it exceeds a threshold of mailing $1.2 billion pieces of mail each year. Capital One, after Sept. 11, began using First Class mail very effectively, he said.
Potter said NSAs help keep the major players in the mail.
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