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Postal Rates Rise 5.4 Percent

Most postal rates increased 5.4 percent as of yesterday.

The Jan. 8 rate increase is the first since 2002 and is needed to comply with a federal law enacted in 2003 requiring the U.S. Postal Service to establish a $3.1 billion escrow account. Without this mandate, the increase might have been avoided. The single-piece rate for First-Class mail goes from 37 cents to 39 cents, and the postcard rate climbs 1 cent to 24 cents.

On Friday, Sen. Susan Collins reiterated the need for postal reform.

“This rate increase, which will likely be followed by another rate increase next year, highlights why postal reform legislation is necessary,” Collins, chair of the Senate Homeland Security and Governmental Affairs Committee, which oversees the USPS, said in a statement. “Despite the broad support this bill enjoys, however, it has been stopped in its tracks by an effort on behalf of just one segment of mailers. This one association, unlike the vast majority of the mailing community, wants to maintain the status quo in ratemaking, which involves 10 months of expensive and cumbersome litigation before the Postal Rate Commission — a system that virtually every expert tells us is a vestige of a different era.”

Though the rate and fee increase was around 5.4 percent for nearly all mail classes and subclasses, different rate changes were necessary in some areas to comply with statutory requirements. For example:

* Rates for small local newspapers decreased 2.3 percent.

* Rates for solicitations from nonprofit organizations also vary. Generally, Nonprofit Standard Mail increased 3 percent while Nonprofit Enhanced Carrier Route mail increased 12.3 percent. In all, nonprofits will pay $17 million less than requested by the USPS.

* The book rate climbed 12.7 percent. By law, all mail classes must cover their direct cost of service, and books, CDs and library materials would violate this requirement otherwise.

In general, regular Standard mail increased 5.4 percent and Enhanced Carrier Route Standard rose 5.5 percent. Priority Mail increased 5.4 percent, Express Mail 5.5 percent, Outside County Periodicals 5.5 percent, Parcel Post 7.1 percent and Bound Printed Matter 5.5 percent.

International rates, which are determined separately from domestic prices, were adjusted to coincide with the domestic rate changes. International rates have not changed since January 2001.

Meanwhile, mailers are already preparing for the next rate case. Many say it will be filed in the spring and implemented in 2007. While USPS board of directors chairman James C. Miller has said to anticipate a mid-single-digit increase in 2007, industry insiders suspect it may be higher.

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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