AP interview: Postal rate increases expected in 2006 and 2007
September 30, 2005
WASHINGTON – Each penny increase in the price of gasoline costs the Postal Service $8 million, and that will drive mailing costs higher, the postmaster general said Friday in an interview with The Associated Press.The agency expects to need a rate increase in 2007, said Postmaster General John Potter. That would come just a year after a 2-cent rate jump forced by a law requiring a big increase in an escrow account.The 2007 increase will be needed to cover higher expenses in the past five years, including employee raises, increases in the price of fuel for trucks, heat for buildings, electricity, transportation and other costs.”Our costs are going up just like everybody else’s costs,” Potter said. The amount of the postage increase will depend on the economy, the cost of gasoline and other factors.”The postal service last raised rates in July 2002,” said Potter. “The only reason that we’re raising rates 5.4 percent (in 2006) is to create sufficient funds to pay the $3.1 billion that’s required in the law.” The January increase would raise the price of a first class stamp to 39 cents.Unless changed by Congress, the escrow requirement would increase in subsequent years, he said.On Tuesday, Postal Chief Financial Officer Richard Strasser predicted that even with the rate increase in January the post office would finish 2006 some $1.8 billion in the red.The escrow requirement was imposed on the Postal Service by Congress when it permitted changes in the agency’s pension funding. A bill that would ease that requirement has passed the House but not the Senate, and postal officials have raised questions about other provisions in the bill that could affect postal operations.Potter also said the post office was forwarding mail to some 400,000 people displaced by Hurricane Katrina and was urging others who have relocated to let the agency know where they are.Fill out a change of address form “every time you move and the mail will follow you,” Potter said.Post offices were set up at relocation centers such as the Houston Astrodome and in other cities where evacuated people were being sheltered.Sharon Cheneau, 50, a social worker from New Orleans, stayed at the Astrodome for several days before a relative in Houston took her in. She said she received no mail at the makeshift post office at the Astrodome, but once she filled out a forwarding address for her relative’s house she began to receive mail consistently until Hurricane Rita began to brew, interfering with the mail anew.”Hopefully, it will get better now,” she said.Only an “insignificant” amount of mail was lost in the storm because items were relocated to upper levels of post offices or diverted to Houston, Potter said, “We got the mail out of harm’s way.”In the wake of the storm the post office set up mobile offices to deliver Social Security and pension checks to people in the region and it is gradually re-establishing service in the affected area, Potter said.He said initially many postal employees were missing but all have now been located in the area affected by Hurricane Katrina. Some have still not been found in areas of Texas affected by Hurricane Rita.On other topics the postmaster general said:-Biodetection systems are being installed in postal plants across the country and will be completed by the end of the year. Developed after the anthrax attacks in 2001, the systems can test for up to 10 biohazards at once.-The post office has developed a new transformation plan for improvement through 2010 which calls for increased efficiency and automation. Currently 85 percent of handwritten mail can be read by machines and that is increasing, Potter said.-The postal service plans to spend more of its advertising budget on – direct mail advertising.-The holiday season is changing. In years past catalogs went through the mail in September and October, people placed orders in November and the big holiday mail flow was between Thanksgiving and Christmas. Now advertising is increasing in November as sellers and buyers realize late orders can still be delivered by the holidays. Christmas cards used to be mailed over a full month; now it’s the two weeks before Christmas.-Mailers such as insurance companies, banks and utilities can purchase special codes to place on their envelopes, allowing the items to be tracked through the postal system. A company using such a code can check to see if the check really is in the mail.—On the Net:U.S. Postal Service: http://www.usps.com—Associated Press writer Kristen Hays in Houston contributed to this report.