Few Hurdles Remain for Rate Case Approval as Mail Volume Drops

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The rate case settlement proposal appears certain of approval as more than half of the 60 mailers involved in the negotiations support the plan. However, final word likely won't come until March.


"A majority has joined the settlement," Robert Rider, chairman of the U.S. Postal Service Board of Governors, said at its monthly meeting last week. "That majority includes almost all of the most active participants in the rates litigation."


If approved, rates will increase an average of 8.7 percent June 30.


Meanwhile, postal officials told board members that the Sept. 11 terrorist attacks, the anthrax mailings and a sluggish economy contributed to a decline in mail volume for the its first quarter, which ran from Sept. 8 to Nov. 30. Volume dropped 2.8 billion pieces, or 5.5 percent, from the same period in 2000.


The decline is the largest in more than 30 years, said Richard J. Strasser, the USPS' chief financial officer and executive vice president. Standard Mail volume led the decline, with 2.2 billion fewer pieces mailed than last year. First-Class Mail dropped 550 million pieces below the previous year, while Priority Mail volume dipped 47 million pieces.


Net income, Strasser said, was $108 million, $521 million less than expected. Total revenue for the quarter was $15.4 billion.


The USPS did hold down costs, Strasser said, with total expenses of $15.3 billion for the quarter falling $355 million below plan. He attributed success in controlling expenses to aggressive work-hour cuts, including management and staff reductions. During the past 15 months, he said, the USPS has reduced its staff by 16,300 full-time employees and continues to make reductions. Officials anticipate a further reduction of 10,000 to 15,000 this fiscal year. The postal service has nearly 800,000 workers.


So far, 34 of the 60 parties involved in the rate case settlement talks have agreed to the plan, including the Direct Marketing Association, Alliance of Nonprofit Mailers, Magazine Publishers of America, McGraw-Hill Cos. Inc. and Dow Jones & Co.


Five others submitted motions last week that ask to cross-examine USPS witnesses. Those parties are American Postal Workers Union, Amazon.com, Coalition of Religious Press, Newspaper Association of America and Val-Pak.


They have until Jan. 16 to file a formal notice of opposition to the proposal. If there are no major objections, the Postal Rate Commission is expected to recommend the plan with final approval then coming from the board.


In other board activity, Rider was re-elected chairman and S. David Fineman was re-elected vice chairman.


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