PostCom Backs Greater USPS Control on International Rates

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The Association for Postal Commerce urged the U.S. Department of Transportation last week to change the methodology used to develop international rates given the expected increase in rates for fiscal year 2006 based on rising fuel costs.


The DOT approves the rates the U.S. Postal Service pays when it buys air transportation capacity to ship international mail.


The association, or PostCom, filed comments with the DOT dated Oct. 3. In them, PostCom counsel Ian D. Volner wrote that the association backs a USPS motion for an expedited decision on its request for the department to adopt a policy of regulatory forbearance regarding rates for the international transportation of mail by air.


A policy of regulatory forbearance would let the USPS negotiate rates with carriers subject to rejection by the DOT.


Contracts would be awarded tentatively via negotiations or competitive bidding, and this process would better align the rates for international carriage with market rates, ensuring that postal customers, including PostCom members, pay lower postage rates, PostCom's filing said.


"The USPS proposal basically says that there is enough competition out in the marketplace that the DOT could forebear from setting prices, and the agency can accept bids and get more favorable prices through a competitive bidding process," Volner told DM News.


The postal service's proposal said that carriers of international mail still would be compensated for rising fuel costs, as these cost increases would be considered when negotiating rates with the USPS. But other factors would reduce the overall rates paid by the USPS -- and thus postal customers -- bringing rates closer to market rates for other types of cargo.


Excessive rates harm not only PostCom members that regularly send mail overseas, Volner wrote, but domestic mailers as well. PostCom agrees with the USPS that maintaining rates at the current level is unacceptable, the filing said.


"The rates have become misaligned with both market rates and underlying costs," Volner wrote. "The result is that the postal service is paying far more than it should for the carriage of international mail. In turn, PostCom members are paying more than they should for postal services."


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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