WASHINGTON, DC – The Postal Regulatory Commission began hearings on Monday, July 12, 2010 for proposed changes in for the U.S. Postal Service. The proposed changes being considered are postal rate increases plus the elimination of Saturday delivery plus shrinking the work force through attrition.

The end of Saturday delivery would bring about a major change from a six-day delivery week to a five-day day delivery week.

Included in the proposed rate changes would be the possibility of raising mail prices above the inflation rate. By law the USPS is limited to rate increases of no more than the rate of inflation. The inflation rate was 0.9% for the 12 months ended in May, 2010.

The USPS has proposed the following rate changes, that would start in January, 2011:

  • A 4.5% increase in the price of a first class stamp from 44 cents to 46 cents
  • Standard-mail parcel rates for packages of one pound or less, would increase by 23.3%. This rate is for small-sized merchandise and product samples.
  • Standard-mail letter and flat postage rates for commercial direct mail campaigns would increase by 5% and 5.1%, respectively.
  • Second class postage rate increase of 8% for publishers of periodicals (magazines and newspapers).

The Postal Rate Commission has 90 days to respond to the proposed rate changes. If approved, the increase would take effect January 2, 2011.

Business React To The Proposed Postal Rate Increases

The reaction from business has been swift and angry. In an article in the B to B website, author Christopher Hosford points out the key arguments by the business community against the proposed rate changes.

Chief among the arguments include the following points:

  • The USPS argues that it is on track to lose $6.5 billion this year due to the shrinking mail volumes and the state of the economy.
  • The losses at the USPS have been caused by dwindling mail volume. Postal deliveries are down because of the increasing use of electronic forms of communications.
  • There is a strong belief by business that a postal rate increase at this time will cause mail volumes to decrease even further.

Jerry Cerasale, senior VP-government affairs at The Affordable Mail Alliance argues against the proposed rate increases at this time. He points out that instead of reacting with rate increases that exceed the rate permissible by law, the USPS should be eliminating its operating costs. They should be making the hard business decisions and not raising rates.

Elimination of Saturday Delivery

The elimination of Saturday delivery has been bounced around for years, but hasn’t happened, yet. In general, postal customers like Saturday delivery and it is our opinion that they will continue to want mail delivery on Saturday. Besides, eliminating Saturday delivery does not follow the same approval path for the USPS as getting a rate increase. It would require approval by Congress rather than an approval by a commission like the Postal Rate Commission.

Still, the loss of a delivery day would have a definite affect on businesses that would be similar to increases in postal rates. The loss of Saturday delivery would mean that there would be fewer advertising impressions upon consumers. This would likely result in a drop in revenue for businesses. Advertisers who send out direct mail and who take out space ads in magazines and newspapers would be affected.

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