Nolan: No More Rate Increases Till Mid-2002

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NEW YORK -- The U.S. Postal Service will not increase rates until the middle of 2002 at the earliest, deputy postmaster general John Nolan told direct marketers yesterday at the luncheon for the 36th annual DMD Marketing Conferences at the New York Hilton and Towers.

But Nolan did not rule out the filing of a new rate case this year, and outgoing postmaster general William J. Henderson has said that the USPS may file this summer for a 10 percent to 15 percent increase in postal rates. The last rate case took one year from filing to implementation.

Nolan addressed mailers' concerns about spiraling postal rates.

"We must find ways to minimize the next rate case," he said.

If the rate increase that took effect Jan. 7 had been as large as the USPS had originally requested, there would only have been one rate increase this year, Nolan said. Instead, the Board of Governors earlier this month voted to go against the Postal Rate Commission's recommendation and institute an across-the-board rate increase by an average of 1.6 percent, he said.

"Why are we doing it?" Nolan said. "Because we're out of cash."

Contrary to public perception, he said the USPS has made moves to cut costs and increase efficiencies.

Although the General Accounting Office has reported that productivity in the USPS has increased only 11 percent in the last 30 years, what is not commonly known is that productivity has increased by 4.5 percent in the last year and a half, Nolan said. The USPS also cut 10 million work hours this year.

Some mailers have called for layoffs or a hard hiring freeze at the USPS, Nolan said. But such moves would ultimately result in worse service, he said.

"We understand the problem," Nolan said. "We understand the importance of affordability. But we also understand the importance of service."

Nolan reiterated the postal service's plan for postal reform, which includes greater flexibility to set rates and deal with labor issues. But competing interests in postal reform have slowed the process, he said.

"I don't want to complicate it," Nolan said. "It's very simple. But the devil is in the details."

Postmaster Henderson was also present. He said he was speaking publicly for the last time as postmaster general, and he ended his last appearance as a public official on a humorous note.

"If I'm not arrested this weekend, you won't see me at a podium explaining my behavior," Henderson told the crowd. "Over the Memorial Day weekend, I'm going to keep a very low profile."

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