BOG: USPS May Seek 10% To 15% Rate Hike
The U.S. Postal Service this summer may be asking the Postal Rate Commission to endorse a 10% to 15% rate increase this summer, according to its Board of Governors.
The increase would be less than the 25% industry leaders were predicting last month after the board formally authorized preparations for another rate case.
“While the USPS this week said it would ask for a 10-15% rate hike, the increase could even be higher for commercial mailers and shippers, and it could come only about 20 months after the 2001 rate increases,” said Direct Marketing Association President & CEO H. Robert Wientzen in a statement.
Wientzen continued “It is imperative that the Postal Service be given the ability to compete in the rapidly evolving, increasingly digital communications and delivery world.”
Association for Postal Commerce president Gene Del Polito ehoed this, saying that while the 10% to 15% increase would be “on average,” direct marketers and mass-mailers would actually be facing an increase of “at least 20%.”
“That’s a $6 billion to $8 billion rate case which is three times larger” that the last rate case that lead to January’s 4.6% rate hike, said Neal Denton, Alliance of Nonprofit Mailers executive director.
Del Polito called the BOG’s disclosure “another effort to try to explain to Congress the serious and acuteness of the postal service’s need for postal reform legislation.” But, he added, “they should not be surprised if they don’t get all they want in that legislation if it ever comes to pass.”
Denton, who also saw the disclosure by the governors as an attempt to light a fire under Congress to pass postal reform legislation, said that while they may succeed the end result “may not be what postal governors are seeking.”
BOG Chairman Robert F. Rider, noting the USPS could lose between $2 billion and $3 billion this fiscal year, said in a press release that “regrettably our call for an additional rate increase, following so soon after the last one reflects the fact that the 30-year old statutory model that governs the postal service is in need of change to protect universal service at affordable rates.”
Last year, after four years of accumulating nearly $6 billion in surpluses, the USPS posted a $199 million loss. It lost $330 million the year before that.
Besides revealing the possible size of the next rate increase, postal governors said they ordered the USPS to take “unprecedented” cost-cutting measures that include an immediate nationwide freeze on 800 capital projects, and an unspecified number of job cuts.
Postal officials were unable to provide a dollar estimate for the 800 projects affected for which they had made commitments but were not actually begun although they said projects already underway were not affected.
