USPS Volume Rises, But First-Class Slips

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The U.S. Postal Service processed and delivered 49.3 billion pieces of mail in its Postal Quarter 1 for the 2003 fiscal year, an increase of 742 million pieces from a soft first quarter last year, an agency official said yesterday.

During the quarter, which runs Sept. 7 to Nov. 29, Standard mail volume rose 1.5 billion pieces, driven by election mail, while First-Class volume dropped 629 million pieces, said Richard J. Strasser Jr., USPS chief financial officer and executive vice president.

Net income was $1 billion on revenue of $16.3 billion. Though revenue was $300 million less than projected, expenses were $500 million under plan. This produced net income $200 million greater than plan.

Strasser projected that Quarter 2, which runs Nov. 30 to March 12, will bring similar results. Continued cost controls would produce a net income at or above a planned $360 million, he said.

The USPS Board of Governors at its meeting also accepted the Postal Rate Commission's recommendation on a periodicals co-palletization experiment. The change establishes two new rate categories and discounts for publishers, printers and mail consolidators to combine different publications or print runs on pallets.

The experiment takes effect April 20 and lasts two years to give mailers time to adjust their practices as they use the incentives. It also gives the USPS time to verify the savings along with the incentives' effects on mailer behavior.

The board also elected current vice chairman S. David Fineman as its new chairman. Fineman replaces Robert Rider, who has served as chairman since 2001. Rider remains a governor.

The governors also elected John F. Walsh to serve as vice chairman. Walsh is a Connecticut businessman and a New Haven city official for more than 35 years.

Postmaster general John E. Potter briefly addressed USPS efforts to lower contributions to a pension plan after a review found that the plan is almost fully funded.

"We are pleased that legislation which addresses the potential overfunding of the postal service's portion of the Civil Service Retirement System is under consideration," he said. "The proposed legislation is needed to ensure stable rates through 2006."

Postal insiders said that a bill involving this issue could be introduced as early as this week.

The USPS estimates it could save $2.9 billion in fiscal year 2003 and $2.6 billion in FY '04. Potter has said that lowering the pension contributions would let the postal service keep rates steady until 2006. Without the lower contributions, Potter has said, the next rate increase would come in 2004.

Potter also named Charles E. Bravo to serve as senior vice president, intelligent mail and address quality, a new position that reports directly to the postmaster general. Bravo is to lead a new organization in address management, intelligent mail planning and standards, and intelligent mail implementation. He also is responsible for setting new standards for coding, reading and mailer participation regarding information placed on all types of mail.

Robert L. Otto was appointed chief technology officer of the USPS.


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