Reaction ranged from disgust to outrage yesterday after the U.S. Postal Service said it would seek up to double-digit hikes for some commercial mail starting early next year.
One of the largest hikes is 14% for some automated flats (catalogs). The USPS attributed the request to the increased cost of processing flat-shaped mail.
Also hit hard in the rate case are nonprofit mailers, who will face a 14.8% increase if they send Enhanced Carrier Route (ECR) mail.
The proposal, which is expected to be filed today, also calls for overall increases in the four Periodicals subclasses ranging from 8.5% to 13.5%.
The USPS boasted in documents that the one-cent rise for the first-class stamp is less than the increase in the cost of living. The average commercial increase is 7.7%, compared with a 6.4% hike overall. The overall average First-Class mail increase is 3.6%.
"If the postal service ever intended to give a better impetus for direct marketers to go to the Internet, I can't think of one," said Gene Del Polito, president of the Association for Postal Commerce, formerly the Advertising Mail Marketing Association, Arlington, VA. He called the increase "revolting."
The USPS proposal also calls for the following general rate changes:
* The price of a Standard A basic automatable letter will rise from 18.3 cents to 20 cents--a 9.3% increase. The first class stamp will go up one cent.
* The basic automatable flat will rise from 24.5 cents to 26.7 cents--a 9% increase.
* The nonprofit basic automatable letter will go from 11.9 cents to 12.9 cents.
* The nonprofit basic automatable flat will decrease from 18.2 cents to 17.8 cents.
The proposed rates will vary depending on volume and automation capabilities. Smaller mailers will suffer the most, sources said.
"If I'm mailing a flat, I'm probably going to experience a 13% increase for a small-volume mailing," said Daniel J. Minnick, vice president postal and industry services for Experian Direct Tech, Schaumburg, IL. "If I'm doing a very large volume mailing, I'm probably going to get by with a 10% increase. If I was mailing a letter, very small volume, I'd expect about a 9.6% increase. If I'm a letter, very large volume, I'd expect about a 7.2% increase."
Board of Governors chairman Einar V. Dyhrkopp said the Board, which approved the filing of a rate case with the Postal Rate Commission, felt "the time was right for a rate increase." He did not elaborate.
The USPS ended fiscal 1999 with a $343 million surplus, its fourth in as many years. However, the USPS debt amounts to $3.8 billion, a USPS spokesperson told DIRECT Newsline.
"The $343 million is not that much of a surplus," the spokesperson said. "We're doing everything we can to hold costs down, it's just the cost of doing business. If we don't put a rate increase in 2001, we're going to face deficits. And neither we nor the American people want that to happen."
Minnick rejected that view.
"The percentage increases ranging from 9% to 15% tells us that their being businesslike is only a piece of paper on somebody's desk," he said. "In the real world, you cut costs to survive."
Non-profit organizations will be hurt badly if the rates become effective, said Neil Denton, executive director of the Alliance of Nonprofit Mailers, Washington, D.C. "We're very disappointed to see the rate increase for community-based churches and charities is over 15%. These are the types of organizations that just can't afford the additional hike."
"We're a little concerned that they are proposing a one-cent increase for first-class mail but proposing a double-digit increase for various types of commercial mail," added Stephen Altobelli, a spokesperson for the Direct Marketing Association. "This clearly means they are saddling the bulk of the increase on commercial mailers. We'll be working through the rate case process to address that issue."
Besides hiking the price of a first-class letter by a cent, the USPS is proposing a one-cent increase in post card postage, a 25-cent increase for 1-pound Priority Mail and a 55-cent increase for a half-pound Express Mail package.
If the USPS rate filing is approved as written, the following changes will also go into effect:
* Rates for commercial ECR mail will increase by 4.9%.
* The maximum weight for automation letters will be increased to 3.5 ounces.
* Pieces subject to residual shape surcharge would also be eligible for the parcel barcode discount. Delivery Confirmation, Return Receipt for Merchandise, and Bulk Insurance Service would be available for all parcels.
