PRC endorses postal rate hike

Mar 23, 2002 10:30 PM  By

(Direct Newsline) The Postal Rate Commission on March 22 recommended that the U.S. Postal Service raise its rates an average of 7.7%. The increase is 1% less than what the USPS had requested when it filed its proposal with the PRC on Sept. 11.

The new rates, expected to be authorized by the USPS Board of Governors next month, could go into effect as early as June 30. It is believed they will generate some $4 billion in additional revenue for the cash-strapped USPS.

While most rates will go up 7.7%, Standard Mail will increase 7.8%, and nonprofit mail rates will rise 6.6%. The USPS had originally requested a 7.3% hike for Standard Mail.

Catalogers and other direct marketers that presort mailings by carrier route will see a 6.2% increase. But nonprofits in this category face a 6.5% hike.

The price of a first class stamp will go up 3 cents, to 37 cents, and the postcard rate will increase 2 cents, to 23 cents. The PRC also recommended a 13.5% rate increase for Priority Mail; a 9.4% boost for Express Mail; a rise of 6.4% for Parcel Post; and a 14.5% hike in post office box rental charges.

The Direct Marketing Association supported for the PRC recommendation. “While we are never pleased when rates increase, we are gratified that the mailing community, the Postal Service, and the Postal Rate Commission could work together to reach this agreement,” DMA president H. Robert Wientzen said in a statement. “It is also my hope that this round of increases will buy us time to achieve needed legislative reforms.”

Bob McLean, executive director of the Mailers Council, called the increase “inevitable but regrettable, because now volume is going to go down and that will further hurt the Postal Service’s finances. But,” he added, “maybe this will wake Congress up to the need for fundamental reform for the USPS.”

McLean also said that current USPS cost-cutting plans were insufficient to reduce its debts and the postal service had to consider further job cuts to really have an effect on its financial health.

The PRC based its recommendations on an agreement reached between rate case participants and postal officials earlier this year, according to chairman George Omas, who praised their actions. “This selfless attitude is a credit to the entire mailing industry,” he said.

Describing this rate case as “unique” because of that settlement agreement, Omas said the PRC’s proposals are “intended to meet the needs of the postal service as identified prior to the terrorist and anthrax attacks of last fall,” which cost the USPS an estimated $5 billion.