Postal Service mulls operational rate hike

Mass mailers are watching closely as the U.S. Postal Service considers its first operational rate increase in nearly five years.

It could potentially be the last rate increase before Congress imposes a rate cap as part of a postal overhaul bill now awaiting action in conference committee. The Senate version of that bill includes a provision limiting the amount by which the Postal Service can increase its rates, a first for the agency.

"This is going to be a critically important case," said Art Sackler, a consultant for the Direct Marketing Association, whose membership accounts for 70 percent of all postage sold in the United States.

Sackler said that because a cap "will make things more difficult" for the Postal Service, the agency could take advantage of operating without a price ceiling for perhaps the last time. While Sackler admitted that "everybody's in the dark about what's going to be proposed," Ben Cooper, who represents direct mailers at Williams & Jensen, predicted the next rate increase "will be in the high single digits."

Because a rate increase proposal must clear both the Postal Board of Governors and Postal Rate Commission, it will likely be 10 months to a year before any price hike will go into effect. A spokesman for the Postal Service said that the increase would help the agency cover costs of gas for its delivery trucks, employee salaries, office renovations and other operating costs.

The bill in Congress would streamline the rate increase process by creating an independent Postal Regulatory Board, which would replace the existing Postal Rate Commission. The Postal Service did impose a 5.4 percent across-the-board increase in 2006 to contribute to its escrow fund.

The increase was noticeable to the public in the two-cent price hike of first-class stamps from 37 to 39 cents. The new increase being considered would affect all classes of mail.