USPS Makes Rate Case Official

Given the toll that the economy is taking on mailers, some catalogers might have expected the U.S. Postal Service to reconsider its proposed rate increase. The USPS Board of Governors (BOG) had announced the imminent filing on Sept. 11, only moments before that day’s terrorist attacks, which worsened already disappointing catalog sales.

No such luck. On Sept. 24, the USPS formally filed for the rate increase with the Postal Rate Commission (PRC). “Our financial situation isn’t good [either],” USPS chief marketing officer Anita Bizzotto said the day of the filing. “We think it’s important to correct that situation as we go forward. We need to continue to make sure we have enough money to run the Postal Service, and unfortunately, the way we do that is to raise rates.” On Sept. 21, the USPS reported that its fiscal year 2002, ending next September, would be $1.35 billion in the red.

“In an economy that has been struggling all year and is now under additional pressure from the Sept. 11 tragedy,” retorts Direct Marketing Association president/CEO Bob Wientzen, “it’s unfathomable that the Postal Service would ask consumers and businesses to sustain yet another postage increase. Such new increases are far in excess of the rate of inflation and will be a major drain on our softening economy.”

Making matters potentially worse for catalogers: The Postal Service has requested that the PRC give the rate case “expedited consideration.” Ordinarily, rate cases take 10 months to complete. But if the PRC agrees to expedite the case — something it did only once, in 1994 — the USPS could of course implement the rates sooner than previously anticipated. Under nonexpedited circumstances, the rate hike would not go into effect until August 2002 at the earliest. Bizzotto is unsure how much sooner the USPS could implement new rates if the rate case gets expedited treatment.

But that’s not the reason the agency is seeking expedited consideration, says Dan Foucheaux, the USPS’s chief counsel, rates and classifications.“The idea is to give the BOG maximum theoretical flexibility,” he says. “Nobody has any implementation date in mind now. It depends on how the BOG determine the financial situation. They want as much lead time as possible.”

Select Proposed Postage Increases

Rate Proposed Changes %
Standard Mail 7.3% (overall average)
Regular subclass 8.0%
Nonprofit 6.7%
Commercial enhanced carrier route (ECR) 6.2%
Nonprofit ECR 6.5%
Pound rate ECR -6.3%
Nonprofit pound rate ECR no change
Parcel Post 10.0% (overall average)
Inter/intra bulk mail center rates 17.6%
Parcel Select 4.8%
Priority Mail
1-lb. rate -2.5%
2 lbs.-5 lbs. shifts to zone-based pricing, resulting in decreases for parcels traveling shorter distances and increases for items shipped longer distances

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USPS Makes Rate Case Official

Washington—The U.S. Postal Service on Sept. 24 formally filed for an across-the-board rate increase with the Postal Rate Commission (PRC). The USPS Board of Governors had announced the imminent filing on Sept. 11, only moments before that day’s terrorist attacks.

When asked whether the USPS had reconsidered the rate filing in response to the now-plunging economy, USPS chief marketing officer Anita Bizzotto said in a press conference, “Our financial situation isn’t good as well. We think it’s important to correct that situation as we go forward. We need to continue to make sure we have enough money to run the Postal Service, and unfortunately, the way we do that is to raise rates.”

The USPS did do at least one thing differently in its rate filing, which calls for an average increase of 7.3% for bulk-mailed catalogs: It has requested that the PRC give the case “expedited consideration.” Ordinarily, rate cases take 10 months to complete. But if the PRC agrees to expedite this case—something it did only once, in 1994, when it turned around a rate case several months early—the USPS could of course implement the rates sooner than previously anticipated.

“The idea is to give the BOG maximum theoretical flexibility,” said Dan Foucheaux, the USPS’s chief counsel, rates and classifications. “Nobody has any implementation date in mind now. It depends on how the BOG determine the financial situation. They want as much lead time as possible.”

For information on rates of interest to you, click on these links to the USPS Website:

Standard Mail

Parcel Post/Parcel Select

Priority Mail

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