Industry Issues — Can Costs Be Passed On?

This much is certain. Reform is stuck in a Congressional holding pattern. Ben Cooper, PIA/GATF’s departing executive vice president of public policy, is intrigued by the philosophical standpoint the USPS will take on issues such as work sharing and negotiating service agreements as it seeks future rate increases.

Working on the assumption that reform remains in a perpetual policy purgatory, the rate increase that takes effect next month only offsets the cost of the civil service escrow payment. And it has been four years since the last increase.

The USPS opposes postal reform in its current state, according to Cooper, and is trying to duck this legislation. One way of doing this: the USPS states it doesn’t anticipate increasing rates above the Consumer Price Index for the foreseeable future. The reform saber rattlers have preached that future rate increases should not stray from the rate of inflation. Is this a promise the USPS can keep or is it mere lip service? Cooper, for one, has his doubts and believes printers would end up absorbing most of the blow for future increases.

“Some people believe the postal service has exhausted all of what they call the ‘low-hanging fruit’—it’s gotten a lot of the expense wrung out of the system,” Cooper says. “So the expenses they’ll cut from here out will be painful. The biggest part of the expense package is labor so, in order to reduce costs there, they’ll have to go into some tougher negotiations, and have to demand more productivity out of employees.”

Energy: The Northeast and Midwest are the most likely regions to be impacted by increasing energy costs. Natural gas prices figure to be the most oppressive, with hikes projected in the 50 percent range. The impact on supplies and the aftermath of the past hurricane season will be a good indicator of things to come.

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