US Postal Service expects to lose up to $2 bil in FY2002
US Postal Service expects to lose up to $2 bil in FY2002
From CATALOG AGE, June 1st, 2001
ORIGINAL TITLE: Another Rate Hike Coming?. FULLTEXT: PM Just one month after implementing its January rate hike, the U.S. Postal Service Board of Governors (BOG) ordered postal management to start putting together another rate increase proposal to present to the Postal Rate Commission (PRC) this summer. Despite the additional revenue it expected to gain from the January increase, the Postal Service still projected a loss of up to $2 billion for fiscal 2002, which begins at the end of September 2001, due to rising costs and its own inefficiencies. (Once submitted, a rate case generally takes 10 months before it’s completed. New rates are typically implemented a year after the original filing.) But could the May 8 announcement that the USPS will raise rates again July 1 mean that the USPS will postpone another rate filing? Most likely not, say sources both inside and outside the Postal Service. “We’re still projected to be significantly in the hole next year even with this increase” says USPS spokesperson Greg Frey. He notes that although the new rates will bring in $975 million in extra revenue for fiscal 2002, the USPS could still lose up to $2 billion next year. And even with the July increase, the agency expects to lose $1.6 billion-$2.4 billion in fiscal 2001. In addition to rapidly rising fuel costs, the USPS has been and will continue to be plagued by the rising consumer price index, which forces the agency to increase its cost-of-living wages to its union workers. In short, Frey says, “There’s been no change from the BOG’s February order on the new rate case.” But some mailers are hoping that they can persuade the BOG to at least delay filing the new rate case. But even that possibility doesn’t look promising. Several mailer groups, including the Direct Marketing Association and the Association for Postal Commerce (PostCom), met two days after the BOG announced the July rate hike. “We’re all almost irrational about the rate increase–we haven’t calmed down yet,” says PostCom vice president Tony Gallo.
“Wouldn’t it be logical for the BOG to wait until a later date to file? That
would be logical, but I don’t know if they think that way.” Gallo speculates that the BOG, which won’t comment about the rate hike or a subsequent filing, is getting positive vibes from Capitol Hill about the July increase. “When (the governors) went to the postal Congressional hearings on April 4,” Gallo says, “they thought they’d be killed, but they were treated with kid gloves.” ISSN 0740-3119; Issue 7; Volume 18; Page 21 Copyright 2001 INTERTEC Publishing
