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U.S. Postal Service seeks 8.5% increase in postage rates

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The USPS said it intends to move to an annual cycle for rate adjustments. Currently, there is no set timetable for rate increase requests. The Postal Service attributed the rate hike request to rising fuel and health care costs.

Industry response to the filing was swift.

"Postal rate increases are never good news for organizations that rely on the mail to get their messages and packages out, and this latest increase would mean millions of extra dollars in costs for commercial mailers and nonprofit organizations," said Jerry Cerasale, senior VP-government affairs for the Direct Marketing Association, in a statement. He said the increase "highlights the desperate need for postal reform."

ABM wants postal reform

American Business Media echoed that sentiment.

"We absolutely believe postal reform is necessary," said Gordon Hughes II, president-CEO of ABM. "It's a 9% across-the-board increase."

Hughes said that now legislation has passed both chambers of Congress by huge margins, "the steps necessary to get the bill to the president's desk for signature must be completed without delay."

Hughes said additional increases could drive small-volume publishers out of the mail stream entirely and create rising costs and falling volumes for the Postal Service.

Publishers say they will seek distribution alternatives, as well as re-examine circulation.

Christopher Wessel, circulation director at Reed Business Information for publications including Variety and Publisher's Weekly , said electronic alternatives exist for circulation marketing.

Seeking alternatives

"I understand the post office's needs and concerns in terms of automation and labor [costs], but at the same time, when there are alternatives out there, I need to aggressively explore those alternatives," he said. "As a circulation director, there are a lot more things I can be doing electronically in addition to direct mail, or perhaps in place of mailing, to keep costs at a reasonable level."

Norm Kamikow, president- editor in chief of MediaTec Publishing, is not surprised by rate hikes and said they do little to help shore up the Postal Service's business. In the meantime, in order to adapt, Kamikow said, "We'll have to look at circulation closely, and make sure we're sorting properly and using everything at our disposal to keep the increased [costs] as low as we can."

Magazine Publishers of America said the proposal amounts to a compounded increase of 17.4% in fewer than 18 months on top of compounded increases of 24% sustained from 2000 to 2002.

James Cregan, MPA's exec VP-government affairs, called the new request "a very serious matter" and agreed that Congress needs to pass postal reform. "It won't affect this case but, if we get it done, it'll be the last double-digit increase magazines will see, since future increases would be tied to the Consumer Price Index," he said.

Congressman John McHugh (R-N.Y.) is one of the key architects of postal reform. His chief of staff, Robert Taub, said legislating postal reform is a matter of when, not if.

"It's a function of timing, of getting the proper folks together, and rolling up sleeves and getting it done," he said. "Congress will be in session through the fall, so there's more than adequate time to get this done."

McHugh has spent nearly 111/2 years working on a postal bill, so waiting a little longer is tolerable, Taub said. The increase itself is another matter. McHugh said in a statement the rate hike proposal "borders on the excessive."

The Postal Service said it will give business mailers incentives to create more efficient mail pieces, based on weight and shape, but those details are not yet known and don't necessarily mean good news across the board.

"The devil could be in the details, with substantially higher rates for some categories of mail," Cerasale said.

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