Could Catalog Postage Rates Increase Soon?

Catalog postage rates might increase once again in 2021, even as mailers complain about frequent delays and inconsistent catalog, postcard, and package deliveries. One client recently told me that some of her decoy catalogs arrived up to 4 weeks late.

Just four weeks ago, Marketing Mail postage rates increased (click here for post). These rates usually increase each January and we plan for the increase in our budgets. However in 2021, we could see a second, even higher, USPS postage increase this summer or fall.

On Wednesday, top US Postal Service officials will testify before a US congressional panel to discuss plans to reform USPS expenses and operations. We expect USPS officials to introduce a 10-year plan.

What happens to catalog postage rates under the new USPS plan?

The proposed USPS plan is expected to target both Marketing Mail and first class mail. Postmaster General Louis DeJoy wants to:

  • implement density adjustment factor increases
  • potentially increase catalog mail postage rates by 7.56% this summer
  • double catalog mailers’ postal rates over the next 10 years
  • slow down delivery of first class mail
  • delay delivery of local first class mail from 2 days to 3 – 5 days instead
  • distribute first class mail across the country via truck instead of by plane

The slowdown in delivery combined with the proposed rate hikes could hurt the catalog industry even further. Catalog postage rates are often the highest component of overall expenses.

While we know that the USPS wants an extra 1 to 3 days to deliver local first class mail, it’s clear that nationwide delivery has slowed dramatically too. National delivery of first class mail saw just 38% delivered on time at the end of 2020.

Ironically, the postage increase could hurt the USPS too. The US Postal service is very dependent on Marketing Mail for its annual budget. The USPS wants to increase revenue from the postage rate hike and lower delivery times even further. Instead it should be prepared to see potential revenue increases offset by a drop in catalog and other direct mail volume.