Postal Summit: Mailers Want Phased Rates

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POTOMAC, MD -- Direct mailers made it clear that they want more predictable, phased rates as well as lower rate increases, panelists and audience members said at yesterday's postal ratemaking summit at the Bolger Academy.


The summit, the first of its kind in postal history, was called by the U.S. Postal Service and the Postal Rate Commission to let interested parties discuss new approaches for postal products and services. More than 150 people attended the opening session. The agenda included panels discussing the often-proposed idea of phased rates to make price changes more regular and predictable.


"Rate predictability is essential, but it is not enough," said panelist Vincent P. Giuliano, senior vice president of government affairs at Advo. "Businesses need certainty. Predictability stabilizes corporate worth. But larger increases are harmful whether you know they are coming or not."


Panelist John Crider, manager of postal affairs at Sprint Mailing Services, said he wanted predictable rate increases.


"This would allow us to set our budgets better and not go over them every year, as it seems to be," he said.


The summit sought audience involvement as well, and many audience members offered comments.


Scott Lorenz, director of postal operations and systems at Time Inc., said the postal service is AOL/Time Warner's largest vendor, and "we need some sort of predictability to manage it. If rate changes were known in advance of their effective date, we could budget appropriately." For example, Lorenz said, Canada Post has already informed the company of rate increases for January 2003 and January 2004.


"Accurate budgeting is so important on a number of levels," he said. "If our estimate is too high, the company allocates too much money for postage, and we either lose interest or we lose the opportunity cost for that money. If the estimate is too low, our profitability projections are not met and our stock price suffers."


Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, said catalogers are preparing for the holiday season.


"They are planning how many catalogs will be sent out and how big the catalogs will be," he said. "They need to know what rates will be far in advance. That's why some predictability is needed. If you have phased rates that are manageable, that are small, you can budget them. You can make a mistake and not be really harmed."


Predictable rate increases are important to mailers large and small. Panelist Richard Strasser, chief financial officer at the postal service, announced the results of a survey the USPS sponsored in conjunction with its recently announced transformation plan. The survey found that 33 percent of consumers, 60 percent of small businesses and 66 percent of medium-sized businesses favored predictable rates.


However, panelist Shelley Dreifuss, director of the Office of Consumer Advocate at the PRC, said that consumers in general don't like small, predictable, phased rates because they have to keep going to post offices to get new stamps. One way to avoid this backlash would be for the USPS to institute a nondenominational First-Class stamp that can be used from "here on in."


Postmaster general John E. Potter said the USPS "is doing everything it can to eliminate unnecessary costs in operations." To do everything the postal service wants to do, "we need changes in the law, but we are not going to sit still waiting for those. We are doing everything possible to improve the system with the tools that are available to us now."


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