U.S.: postal rates to increase again; poor economy blamed

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Postal Service considers raising rates again

By RANDOLPH E. SCHMID, Associated Press WASHINGTON

(February 6, 2001 2:06 p.m. EST)

http://www.nandotimes.com

Facing massive losses, the U.S. Postal Service is already considering another rate boost that could result in higher prices early next year.

The post office is reportedly facing losses of up to $2 billion this year despite the price increase that took effect Jan. 7, which included raising a first-class stamp a penny to 34 cents.

While approving that increase, the independent Postal Rate Commission rejected or scaled back several other requested price hikes, cutting expected income by some $1 billion. At the same time, mail volume has dropped because of the poor economy, further reducing anticipated income.

The postal board of governors ordered the agency's management Tuesday "to begin preparing a rate case as soon as possible to ensure the continued financial viability of the Postal Service," board Chairman Robert F. Rider said after a board meeting in San Antonio, Texas.

Rider's statement said the governors "unanimously voiced disappointment" at the commission action and noted the board asked the independent commission to reconsider.

The postal governors can overrule the commission and institute higher rates on their own, but only if they vote unanimously to do so. Senior officials could not be reached for comment on whether the governors may try to overrule the commission.

In addition to preparing to file a request for another rate increase, Rider said the board had ordered management to review all programs and projects, curtail or eliminate all nonessential activities and evaluate the Postal Service's long-term rate-making needs.

He said the agency will cut capital spending this fiscal year from $3.6 billion to $2.6 billion.

The complex process of increasing postal rates can take nearly a year and postal officials have long criticized delays that prevent them from responding quickly to market pressures and competitors' price changes.

Given the increasing competition from electronic communications, the ability to change postal prices quickly has become vital, agency officials say, and they hope Congress will change the law governing their operation.

The agency is also facing a decline in volume.

Standard A mail volume, which consists largely of advertising, increased during the most recent reporting period, but volumes in most other major areas declined, the agency said. First-class and Priority Mail have been adversely affected by the economic downturn, officials said.

The Postal Service receives no tax revenue for its operations, but it is still a government agency operating under laws set by Congress.

-- Andre Weltman (aweltman@state.pa.us), February 06, 2001

Answers

The idiots don't understand that the more they raise rates the less business they'll get as we break down and go for electronic payment, email and whatever other alternatives we can manage. Of course, their bureaucracy has a lot to do with continuing losses. I find it almost impossible to believe that they can't operate on the revenue they receive.

-- Guy Daley (guydaley@altavista.com), February 06, 2001.

Surprise? No matter what you name it, it's a typical government bureaucracy with no incentive to improve efficiency or effectivenessa. How much extra does it cost to carry on this charade of an independent entity cost? The franking privilege of congress? Those TV ads? How much income from first class mail is used to subsidize express?

Note that while the USPS receives no tax revenue for its operations, it receives interest free loans. Have any paid back, or even down?

You saw what happened when parcel delivery was opened to competition. Sometning like 80% was taken over by FedEx, UPS and other private, profit making companies. Why not do the same for first class mail? Not a chance!

-- Warren Ketler (wrkttl@earthlink.net), February 06, 2001.


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