Mailing & Fulfillment Special Report — Rate Case Realities

FOR THOSE of us who work in the postal world every day, a rate case is an interesting but not overwhelming event. Most of us generally understand where it comes from, how it’s litigated and what it all means in the end. But for many professionals—such as printers—who may be less directly involved in the production of mail, the arcana of postal matters gets even murkier when there’s a rate case. So, as the current case is drawing to a close, it might be useful to step back, consider what it’s all about and draw some general conclusions.

First, don’t get confused by the process. Basically, the U.S. Postal Service (USPS) does the math, projecting mail volume and its financial circumstances over a future period, then breaking the answer down to postage rates. Its regulator, the Postal Rate Commission, renamed the Postal Regulatory Commission (PRC) last month, performs its statutory role and conducts a trial-like proceeding, complete with witnesses and testimony. In the end, after 10 months of litigation, the PRC issues a “recommended decision” that the USPS governors consider, then accept or reject. (In the latter case, things get really interesting, but that’s not likely to occur this time.) Finally, the governors set the date for when the new rates, and any associated rule changes, will take effect. This year, the publicly circulated date is May 6, although that may change.

Second, don’t get too fixated on the numbers. Postage rates are important, of course, but they don’t tell the whole story. It’s more important to know why they are what they are, because they reflect costs that the USPS is experiencing, or cost savings that the mailing industry has enabled by worksharing, i.e., what it does with mail before turning it over to the Postal Service.

Finally, stay focused on the bigger picture—how larger changes in how the Postal Service operates are being reflected in the prices and rules affected by the rate case. By doing this, you can get a better understanding of how mail and mail processing are changing and, as a result, how those who produce mail can adapt and thus improve their own business situations.

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