POSTAL SERVICE REQUESTS BIGGEST RATE HIKE IN SIX YEARS

Increases Would Take Effect Next Fall

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WASHINGTON (AdAge.com) -- The Postal Service Board of Governors unveiled an expected rate hike request, including the biggest boost in six years in the price of a first-class stamp.

The Board of Governors requested a 3-cent increase in the price of a first class stamp to 37 cents, an 8.2% hike with rate increases averaging 8.7% for other classes of postage.

Board Chairman Robert F. Rider said the rate hike was necessary "to maintain the universal delivery system."

The increases, which were announced at a Washington board meeting that had to be adjourned because of the threat of terrorism today, have to be approved by the Postal Rate Commission and would likely take effect next fall.

A fact sheet distributed by the board said Express Mail would rise 9.7%, priority mail 13.5%, periodicals 10%, so-called standard mail (advertising circulars) 7.3% and packages 8.9%. Further details of the rates will become apparent when the board formally files the rate case later this month.

The overall increase was slightly less than the 10% to 15% marketing and media groups had feared based on earlier Postal Service numbers, but the amount still didn't make them happy.

The Direct Marketing Association warned that a hike before the 2002 holiday season, a peak mail period, could end up driving mailers to look for alternative forms of delivery and said the increase was still well above inflation

"With another greater-than-inflation-sized increase, the Postal Service is writing a how-to book on driving customers away," H. Robert Wientzen, the association's president-CEO, said in a statement. "In this slowed economy, instead of looking at ways to pass along increases to its customers, the Postal Service needs to focus on cost cutting as a way to remain viable while maintaining its customer base."

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