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The Rise (and Fall?) of Postal Rates: Q&A with UW’s Vice President of Postal, Chris Armstrong

Wed, Feb 10, 2016

What is a Postal Exigent Rate?

Simply put, a postal exigent rate is when postal rates increase beyond where they once were supposed to stop. In more detail, it is an action taken by the U.S. Postal Service to raise market-dominant prices above the CPI-U price cap due to extraordinary or exceptional circumstances. In such circumstances, the Postal Service may file a proposal with the Commission for an “exigent” rate increase. Among other requirements, the Postal Service proposal must:

  • Describe the exigent circumstances and show why they necessitate the increase,
  • Show that the proposed rates are reasonable and equitable, and
  • Describe circumstances under which the increases could be rescinded or reduced. 

Why do we currently have one?

It was ruled that the USPS was entitled to recoup $2.8 billion in losses stemming from the recession and loss of mail volume. This "Exigent Rate" was calculated to be a 4.3% surcharge. The surcharge was to remain in place until the full $2.8 billion was recovered. The effective date of the surcharge was January 26, 2014. USPS lobbied for an additional $1.19 billion dollar loss to be included as a result of the recession and were successful bringing the total Exigent surcharge amount to $3.9 billion.

How long will the Exigent Rate stick around?

According to the Postal Regulatory Commission, once the USPS has made up the $3.9 billion loss, the additional 4.3% surcharge, or exigent rate, must be taken out. According to the PRC this will take place in the beginning of April of 2016 and the 4.3% will be removed.

Will we see a reduction of Postage rates this year?

According to Meghan Brennan, Postmaster General the answer is, yes. The USPS is on track to "recoup" the losses that they sustained during the recession and that the time frame would be the first week of April.

 What else do we need to know about the Exigent Rate surcharge?

These type of changes to rates don’t happen with the click of the USPS’s fingers. Marketers can take into account that they will be notified 45 days prior to implementation, as the USPS is required to provide notice to the industry and stakeholders that rates will be changing with the removal of the 4.3% surcharge. 

What changes does an Exigent Rate cause you to make in your marketing plans? How can we help you further navigate these Rates and ensure you can still deliver on goals and ROI for the first half of the year?