Originally created 01/12/00

Postage up a penny in 2001

WASHINGTON -- Expect to pay a penny more to send cards and letters starting early next year.

And the cost of mailing magazines and catalogs is expected to go up significantly -- proposals that are stirring up a hornet's nest in the business community.

Sending post cards and letters would cost 21 cents and 34 cents respectively under new rates proposed Tuesday by the Postal Service.

"We looked at it and held off as long as we could hold off," said Einar V. Dyhrkopp, chairman of the postal board of governors. He said the new rates won't take effect until 2001.

The proposed increases average about 6 percent over all classes of mail, Dyhrkopp said. They now go to the independent Postal Rate Commission, which will hold hearings before ruling on them.

Increases vary among the various types of mail and some of the proposals were not sitting well.

"It's devastating. The average increase for (magazines) looks to be about 15 percent, which is a terrible blow," said Jim Cregan of the Magazine Publishers Association.

While postal officials say they have seen little impact so far from the growth of the Internet, Gene Del Polito of the American Association for Postal Commerce says the proposed increases would make that happen.

"If they really wanted to do something to stimulate people's interest in moving their business to the Web, I can't think of anything better they could have done," he said.

Rate increases average about 14 percent for catalogs, Del Polito said.

"If you happen to be L.L. Bean or Land's End or anybody who does business by catalog, the message is clear: Make your website as interactive as possible," he said.

Neal Denton of the Alliance of Nonprofit Mailers said the proposed increases are also above average for small, local charities.

And National Newspaper Association President John Sturm complained that some of the rates for heavier pieces of advertising mail, which compete with newspapers, were proposed for a rate cut.

"We are always quite concerned when ... there are rate decreases proposed for certain segments of our competitors' business," he said.

The Postal Service is required by law to base its rates on the cost of handling each type of mail.

In addition to the increase in the base rate for a first-class stamp, the charge for each additional ounce would rise from 22 cents to 23 cents.

Priority mail would rise from $3.20 to $3.45 for the first pound, and the first half-pound of Express Mail would increase from $11.75 to $12.30.

"This request is just the right amount at the right time for the Postal Service," said Dyhrkopp. He said the governing board began discussing rate increases last fall, but decided it could wait until now to act "and still not go in the tank."

Postmaster General William Henderson stressed that the 1-cent boost in first class mail rates is below the rate of inflation.

The post office has a $363 million profit in fiscal 1999, which ended last September, and is expecting to be about $100 million in the black this year, Henderson said.

Those are the smallest profit margins in five years, however, and rising costs would have led the agency into the red without the planned increase.

United Parcel Service, one of the post office's main competitors in the delivery business, recently announced a rate increase. Another competitor, Federal Express, announced a 3 percent fuel surcharge, which spokesman Jesse Bunn described as temporary.

Unlike its competition, when the Postal Service wants to raise prices it must seek permission from the independent Rate Commission and provide detailed supporting documents. The commission then holds hearings and issues its decision; the process takes 10 months.

Assuming commission approval, the matter would return to the postal governors in November or December.

The current 33-cent first-class rate took effect Jan. 10, 1999, with a 1-cent increase.

The Postal Service is a semi-independent federal agency. It does not receive tax money for operations and is expected to make enough money to break even over time. The agency still carries a $3.5 billion accumulated deficit, built up over many years of operating in the red.

In recent years the agency had sought to delay rate increases as long as possible, with the result that when they did occur they were 3 or 4 cents. Henderson said large business mailers have indicated to the agency they prefer smaller increases at more frequent intervals to the larger boosts.

First-class U.S. postage rates, per ounce, through the years:

--July 1, 1885: 2 cents.

--Nov. 3, 1917: 3 cents.

--July 1, 1919: 2 cents.

--July 6, 1932: 3 cents.

--Aug. 1, 1958: 4 cents.

--Jan. 7, 1963: 5 cents.

--Jan. 7, 1968: 6 cents.

--May 16, 1971: 8 cents.

--March 2, 1974: 10 cents.

--Dec. 31, 1975: 13 cents.

--May 29, 1978: 15 cents.

--March 22, 1981: 18 cents.

--Nov. 1, 1981: 20 cents.

--Feb. 17: 1985: 22 cents.

--April 3, 1988: 25 cents.

--Feb. 3, 1991: 29 cents.

--Jan. 1, 1995: 32 cents.

--Jan. 10, 1999: 33 cents.


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