DMA: Anthrax Threat Won't Affect Rate Case

Mailing groups don’t expect the U.S. Postal Services’ costs to combat the anthrax threat will affect the current rate case.

“Generally speaking, we believe the USPS will go on with the rate case that they have filed,” said Jerry Cerasale, senior vice president for government affairs at the Direct Marketing Association.

However, the anthrax threat along with costs from the Sept. 11 terrorist attacks is hurting the postal service’s finances. Even if the current rate case is unchanged, some mailers think another will be filed next year to make up for lost revenue and extra costs.

The USPS had already asked Congress to help it deal with added costs and reduced mail volume resulting from the Sept. 11 attacks and its aftermath, but the amount has not been revealed. Last month, the agency announced that it would seek an overall 8.7 percent rise for all postage rates, including a 3-cent increase in the price of mailing a First-Class letter. Its expected loss for fiscal-year 2001 is $1.65 billion.

The financial harm to the postal service from the anthrax scare could range from $200 million to $2 billion. For the three weeks after the September attacks, USPS revenue was $400 million to $500 million below plan. Mail volume dropped 5 percent in September compared with the same period last year.

“Our view right now is that mail is being used as a weapon by terrorists,” Cerasale said. “We think the postal service should go to Congress and try and get some help because they have been the target of terrorism, similar to the way the airlines have been.”

He said the money for the anthrax threat should be separate from what was requested for Sept. 11 attack.

“This is very different,” he said. “This is a second attack, and we think the USPS should be seeking some money from Congress to handle this specifically.”

The airline and insurance industries are among those that have sought financial help from Congress since the attacks. FedEx and United Parcel Service, for example, will be reimbursed under the Air Transportation Safety and System Stabilization Act. The measure, enacted after Sept. 11, provides $15 billion to airlines to help prevent bankruptcies and minimize financial hardships. About $500 million will go to cargo airlines.

Though part of the federal government, the postal service does not receive tax money and is required to pay its own expenses from fees charged for moving the mail and to break even over time.

Before the anthrax threat, the U.S. Postal Inspection Service was developing a plan to enhance mail security, and estimates were $150 million to $200 million over five years. The USPS also had planned to provide further hazardous-materials training for all of its retail acceptance employees at a cost of $3 million to $4 million.

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