USPS Files Rate Case

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The U.S. Postal Service Board of Governors yesterday filed its next rate case with the Postal Rate Commission, seeking a $6.1 billion increase in postage rates across the board.


This proposed increase is in addition to the $3 billion in increases the postal service has implemented since January.


The request is for an overall rate increase of 8.7 percent. For Standard Mail, overall rates would rise 7.3 percent. Regular Standard Mail rates would rise an average of 8 percent, and nonprofit rates an average of 6.7 percent. Commercial enhanced carrier route rates would rise an average of 6.2 percent, and nonprofit enhanced carrier route rates would increase an average of 6.5 percent.


On average, within each subclass, flats -- or catalog-shaped mail -- would increase more than letters.


Other notable proposals in the Standard Mail category are:


-- Large destination entry discounts. According to the filing, greater discounts would provide incentives for mailers to use their own or third-party transportation to move Standard Mail closer to the point of delivery.


-- Two new presort options would replace the Basic Automation Rate -- Automated Area Distribution Center and mixed-AADC. These options encourage finer sortation by mailers when the necessary volume exists.


-- As in the last case, the USPS proposes that automation-compatible letters weighing up to 3.5 ounces receive an automation letter discount.


-- Customers would experience higher prices for some letters containing objects or having other characteristics that render the pieces nonmachineable and require higher-cost manual processing. The nonmachineable letter surcharge would be 4 cents for regular and 2 cents for Nonprofit Standard mail.


-- The residual-shape surcharge would increase by 5 cents for items prepared as parcels. The 3-cent barcode discount for regular and nonprofit parcels would be retained.


The USPS also asked for a 3-cent increase on the price of a First-Class stamp, which equates to an 8.8 percent increase and a total increase for the class of 8.2 percent; 9 percent for packages; 10 percent for periodicals; 13.5 percent for Priority Mail; 9.7 percent for Express Mail; 19.8 percent for Business-Reply Mail; and 9.1 percent for Bound Printed Matter.


Mailing groups are already expressing dismay over the filing. The Direct Marketing Association, for example, voiced grave concerns over the timing and size of the postal rate increase request.


"The postal service has already hit the mailing public with two rate increases this year that will take $3 billion out of the American consumers' wallets. Now they are seeking to take an additional $6.1 billion next year," said H. Robert Wientzen, president/CEO. "In an economy that has been struggling all year and is now under additional pressure from the Sept. 11 tragedy, it is unfathomable that the postal service would ask consumers and businesses to sustain yet another postage increase."


Since the approval process takes 10-12 months, the new rates could take effect just as businesses and consumers gear up for the 2002 holiday season. Because of the lengthy approval process set forth in current law, the USPS board indicated that it felt compelled to seek the increase now.


At an August meeting with postal officials, business executives said that, given the economic climate, the prospect of rate increases next fall would force them to plan now to reduce volume next year, further reducing the USPS' ability to remain competitive.


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