By: Todd Shields The U.S. Postal Service wants to follow this year's two rate increases with yet another price hike. The development is raising anxiety not only among mailers but also among the U.S. senators who oversee the money-losing service.
At a hearing last week, Sen. Daniel Akaka, D-Hawaii, had a key question for Postmaster General John E. Potter: "How does the Postal Service calculate at what point raising rates will have a negative impact" on newspapers, magazines, and others?
"We need to keep all Americans linked," Potter answered. "We understand our obligation to keep costs down so those products remain competitive."
Such sympathy is weak balm to publishers facing yet another hike in the periodicals rate used to mail newspapers to subscribers. This year's rate increases elevated costs by about 12%. Postal governors on Sept. 10 decided to ask for another increase that is expected to include a 10% boost in the periodicals rate. The independent Postal Rate Commission will spend nine or 10 months reviewing the request.
The increases worry Ken Allen, CEO and executive vice president of the National Newspaper Association, which represents small newspapers that in many cases depend on the mail for distribution. "A 10% increase every year gets to be a killer," Allen said.
Steep losses propel the rate increases. Potter told senators he expects the service to lose $3 billion this year and next year. He said he would submit a draft for postal reform soon and a detailed plan by the end of the year.
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