Server: Microsoft-IIS/3.0 Date: Fri, 21 Nov 1997 04:16:30 GMT Content-Type: text/html Accept-Ranges: bytes Last-Modified: Fri, 07 Nov 1997 14:43:57 GMT Content-Length: 7741
Proposed
Penny Increase in Postage Has Pros and Cons for Mailers You have probably already heard the big news from the U.S.P.S.: on July 1, the Board of Governors presented a rate case to the Postal Rate Commission, requesting a one-cent increase in U.S. postage rates, possibly effective in May 1998. But how will this increase affect business mailers? After nearly three and a half years of steady postage prices, the second longest period of rate stability in the 26-year history of the Postal Service, the announcement of a penny increase came as no surprise to many industry analysts. On the whole, many mailers seemed pleased with the small jump in the average rate. After all, a 33-cent rate is still an increase of only 3.1% over the existing price. A closer look, however, reveals that many First-Class automation mailers could face an increase closer to 5%, depending upon the level of automation chosen (basic, three-digit or five-digit). Average 4% rate hike is expected for advertising mailers The U.S.P.S.s proposal would enable many consumers to actually cut postage costs, but most high-volume advertising mailers will experience an increase. Additionally, business mailers opting to use the proposed new prepaid envelopes in order to save their customers money could find themselves faced with significantly higher administrative costs. Some of the biggest increases in postage dollars would come in the Enhanced Carrier Route (ECR) basic and automation rate categories. The proposal would make the ECR basic rate for letters the same price as for flats, causing those rates to jump about 10% on average. There is some good news for business mailers, however. Some categories within Standard (A) would actually enjoy decreases. For example, the rates for nonautomation presort letters would drop by as much as a penny if brought to the bulk mail center. Rate case specifics Under the proposed rate case, rates for all categories of domestic mail would change in varying amounts, based on their individual handling costs. The price for businesses to send a monthly statement would increase 4.6 percent, or up to 1.1 cents per piece on average. The increase would average 4.5 percent across all domestic service, less than half of the expected 10 percent increase in the Consumer Price Index for the 41-month tenure of the 32-cent rate. The 1998 rates would also represent the second straight adjustment below inflation, effectively cutting the real price of First Class postage by seven percent since 1991. The Postal Rate Commission is expected to take about nine months to review the rate case. "Today a penny doesnt go very far," says Dr. Tirso Del Junco, Chairman of the Postal Service Board of Governors. "But a penny increase is all we need. Its just enough for the Postal Service to maintain universal mail service, offset projected losses, help us take record service performance to new heights for the nation, and keep rates steady to the year 2000." Stay tuned for updates on the latest developments concerning this rate case. |
Send your comments to webmaster@pitneybowes.com