US Postal Service Raises Rates

09 May 2001

As widely anticipated, the US Postal Service has announced a new rise in postage charges, effective July 1, provoking the wrath of magazine publishers and direct marketers.

Although the rate for first-class letters weighing less than one ounce remains unchanged at 34 cents, it will rise 2 cents for each additional ounce to 23 cents – an overall rise of 1.6%, set to generate an extra $900 million for the financially beleaguered USPS.

The new rates will lift the price of sending direct mail by one-half to three-quarters of a cent per unit – a move greeted frostily by direct marketers. “Now is absolutely the wrong time to raise rates,” fumed Jerry Cerasale, senior vp–government affairs at the Direct Marketing Association. “In a faltering economy, mailers will look for cheaper alternatives” – namely private contractors.

Also seething are the nation’s magazine publishers, with the price of posting periodicals set to rise by as much as 25%. “The question is when is this going to stop?” demanded Daniel B Brewster Jr, chief executive at Bertelsmann unit Gruner + Jahr USA Publishing, who fears that the latest rise will cost his company $2m. “I can’t run a successful business with those kind of increases.”

The timing appears particularly savage – many magazine publishers are undergoing a period of falling newsstand sales, plummeting ad revenue and folding titles.

News source: Wall Street Journal