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Commentary & Analysis

Postage, Now and Forever

Straight Talk From the Digital Printing Council Postage,

By WhatTheyThink Staff
Published: October 10, 2006

Straight Talk From the Digital Printing Council Postage, Now and Forever By Frank J. Romano October 10 , 2006 -- Each penny increase in the price of a gallon of gasoline costs the post office $8 million, and payroll, health expenses, and other costs also have been rising. In addition to its own fuel expenses, the post office has about 70,000 employees who use their own vehicles and are reimbursed for fuel costs, and there are about 17,000 contractors whose rates are adjusted for rising fuel costs. Overall, the Postal Service expects to finish this fiscal year about $2 billion in the red. To move to the black postage increases are inevitable. Under the current requested increase the first ounce of a letter would rise 3 cents to 42 cents and additional ounces would cost 20 cents instead of the current 24 cents. That means a saving on heavier items such as wedding invitations. The cost to mail a 2-ounce letter would drop from 63 cents to 62 cents. Other changes would include Express Mail, flat rate up from $14.40 to $16.25; 2-ounce barcoded bank statement, down from 54.5 cents to 48.6 cents; bulk-mailed weekly news magazine, up from 17.9 cents to 20 cents; presorted catalog, up from 32.1 cents to 33.6 cents; and post cards, up from 24 cents to 27 cents. The single biggest element in this legislation is the establishment of a cap on postage rates tied to the consumer price index. Then there is the forever stamp--it would help soften the blow of a rate increase by allowing customers to stock up. As originally proposed it would sell for the first-class rate and, once purchased, the special stamp would remain valid for whatever the first-class rate is when it is used, regardless of future increases. How long is forever? One or two rate increases? The single biggest element in this legislation for the entire mailing industry, printers included, is the establishment of a cap on postage rates tied to the consumer price index. That would mean that a class of mail could not increase by more than the CPI. The Postal Service will be looking at shape as well as weight in setting new rates, officials have said, particularly in the face of the decline in first-class mail as more people pay bills and send messages via the Internet. Once the post office proposes a rate change, including the new stamp, the matter goes to the Postal Rate Commission, which holds hearings and has 10 months to consider the matter before responding. The earliest a change would take effect would be May 2007. The cost of a first-class stamp went from 37 cents to 39 cents in January. Before that, the price had been unchanged since 2002. The House and Senate have both passed bills and efforts are under way to resolve differences between the two versions, but it also faces the threat of a presidential veto. It currently costs 63 cents to mail a two-ounce first-class item whether it's a letter, large flat envelope, or package. But the post office makes more than 30 cents on the letter, 10 cents on the flat, and loses money on the package. The U.S. Postal Service is the single biggest distributor of print in the country. It will not go away, but increasing pricing will adversely affect print.

 

 

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