The days of windfall U.S. Postal Service profits and low rate increases may be ending and the next rate case may come sooner than expected, fear mailing industry observers in light of the USPS’s latest financial figures.
Despite record gross revenue of $60.1 billion, the U.S. Postal Service ended fiscal 1998 on Sept. 30 with a $600 million profit, $100 million more than projected, but leading industry officials were hoping the USPS could at least match, if not better fiscal 1997’s $1.2 billion surplus, which was less than the $1.6 billion recorded in 1996 and significantly lower than the $1.8 billion achieved in 1995.
According to final figures filed with the Postal Rate Commission, the USPS took in $1.8 billion more than it did in fiscal 1997, when it posted a surplus of $1.2 billion, on a record volume of nearly 199 billion pieces, some 8 billion more than the previous year.
Based on last year’s results, industry officials like Advertising Mail Marketing Association president Gene Del Polito said they believed the days of $1 billion-plus profits are over for the USPS.
“Obviously fiscal 1998 was a fantastic year for the USPS, but I doubt it will carry over into this fiscal year,” he said. Postal officials, he added “have their work cut out for them to at least equal last year’s performance if they are not to find themselves in the position of raising rates before 2001 as promised.”
Fearing the start of a trend in reduced profits for the USPS, Jerry Cerasale, the Direct Marketing Association’s senior vice president for government affairs, urged postal officials to “quickly take steps to stem the tide so that the new rates [which went into effect on Jan. 10] will be in effect for a significant period of time.”
Last Sunday most postage rates, with the exception of those for nonprofit mailers, went up an average of 3%. At that time nonprofit mailers saw their rates go up by an average of 20% atop a 2% increase that went into effect in October.
Neal Denton, Alliance of Nonprofit Mailers executive director, blasted both the surplus and rate increase saying that the USPS “is recognizing this tremendous surplus under the old rate structure. It is a further example of why we should never have seen a rate increase. The additional $1 billion the USPS is charging its customers is unfair, unnecessary and unlawful.”
The Alliance is challenging the rate increase in a federal appeals court. The trial is expected in April.
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