Ad Mail to Drop

The U.S. Postal Service anticipates a 25% drop in first class mail volume and revenue between 2003 and 2008 and unspecified declines in Standard A mail as a re sult of electronic diversion, says Postmaster General William Henderson.

The Government Accounting Office, using figures supplied by the USPS, projected that $17 billion of the postal service’s annual revenue of more than $60 billion would be jeopardized by a yearly decline of 2.5% between 2003 and 2008. This is expected to raise the price of a first class stamp from the current 33 cents to 50 cents.

The GAO also predicted that increases in other classes of mail – notably periodicals and standard – would offset any losses from first class mail.

Henderson denies that billions in revenue were in jeopardy.

“No one can precisely know how much will be lost or how soon,” he says.

The U.S. Postal Service has asked Congress to update the 1993 Revenue Forgone Reform Act to prevent enhanced carrier route rates for nonprofit Standard A (advertising) rates from going up more than 35%.

Portions of the act, phasing out the government’s annual appropriation to cover the postal service’s costs of processing and handling free and reduced-rate mail, have outlived their usefulness and need to be revised, according to the USPS.

The postal service proposed that:

– Standard A nonprofit periodical rates be 5% less than regular commercial rates.

– The preferred library rate be 1 cent below the commercial rate.

– A provision be included in the ratemaking process that would allow nonprofit Standard A rates to be lowered when there is insufficient costing data.

Without the changes the USPS claims nonprofit Standard A enhanced carrier route rates would go up by more than 35%. In addition, nonprofit periodicals mailers would be forced to pay higher rates than regular commercial rates and there would be a corresponding hike in Standard B library rates.

While the changes would result in smaller rate hikes for nonprofit mailers, and virtually no increase in nonprofit library rates, the USPS says commercial mailers would have to pay about $67 million in higher charges to make up the difference.

The USPS filed its request for the update with the House postal subcommittee led by Rep. John McHugh (R-NY) shortly after filing the pending rate case with the Postal Rate Commission. In that case, the USPS seeks to boost postage fees next January by an average 6.4%, while raising nonprofit rates as much as 20%.

A number of industry organizations have endorsed the proposed changes, including the Alliance of Nonprofit Mailers, the National Federation of Nonprofits, the Association for Postal Commerce and the Direct Marketing Association.