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The next postage rate increase--It's likely to be HUGEJul 08 '01 Write an essay on this topic.The Bottom Line Despite two postage increases in 2001, the next rate increase in 2002 will be enormous. Expect a 10% increase for first class mail and 15% for all other mail types. Quick...name the only business in America that responds to losing business by increasing its prices. Say hello to the US Postal Service and the next postage rate increase. I work for a trade association which represents a key segment of the mailing industry. It's our business to keep our ear close to the ground about postal rate increases because of the tremendous impact it has on our member companies. I thought it would be useful for my fellow Epinionators to know what we've been hearing from the mailing community. Everyone uses snail mail to some degree, and if you're in business you probably use a great deal of it and are going to be preparing your 2002 budgets soon. I realize this message is a departure from the normal movie, technology, travel, etc., reviews you're used to, but we all use the mail, so this seems like an appropriate forum to share information you might not get elsewhere. My information comes from people within the US Postal Service as well as those who follow this issue closely. Some of what I am going to say comes directly from Deputy Postmaster General John Nolan, who spoke to our association about two weeks ago. 1. Although it did not affect the price of a first class stamp, those of you who send any other class of mail know that there was a fairly small postal rate increase that went into effect July 2. This was the second increase this year. The first one in January raised the price of a first class stamp by a penny (about 3%) and all other types of mail by an average of about 8%. 2. In spite of this, there will be a new rate increase for 2002. (This comes directly from John Nolan). You can expect to see an announcement some time later this fall or possibly in early 2002. 3. The Postal Service is hemorrhaging money, so the next increase is going to be quite large--the consensus inside the mailing community is 12-15% overall on average and some are projecting even higher. I have not heard from anyone who thinks it will be lower. The word is that they want to raise First Class postage 3 cents, which is a 9% increase. Historically, increases for other classes of mail (first class pre-sorted, standard, periodicals, parcels, etc.) have been significantly higher than the increases for First Class mail. For a variety of reasons, there is pressure to keep First Class rates as low as possible. As a practical matter, this means that if the increase for First Class mail is less than 3 cents, other classes will be higher. Assuming a 3 cent increase for a First Class stamp, a reasonable expectation is that other classes of mail will go up at least 15%. 4. There is a slight possibility that the next rate increase will be phased in over a 2-3 year period. My guess is that the higher the overall increase, the greater the likelihood the increase will be phased in. However, there appears to be fading support for a phase in within the Postal Service. 5. Because rate filings generally take 8-10 months to become finalized, if the USPS announces plans for a rate increase this fall, the earliest your budgets should be hit with a postage increase will be July 2002. 6. I'll be recommending that my organization budget for a 10% first class postage increase and a 15% increase for other types of mail for the 2nd half of 2002. I'm reminded of the scene from the movie "Animal House" where the fraternity pledge has to say, "Thank you sir, may I have another," each time he is smacked on his rear end. That's kind of like what's happening with the Postal Service. Unfortunately, there isn't much anyone can do about it. I could go into the whole Byzantine process by which the Postal Service files for increases, the role of the Postal Rate Commission, intervenors, and the Postal Board of Governors, and so forth, but you probably don't really want to know about this. It's like watching sausage being made. Thanks for reading this, and as always, comments, questions or criticisms are welcome.  |
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