Higher Postal Rates Blasted

Truckers and shippers greeted this week’s postal rate increase with scorn, calling for changes in the way the Postal Service does business.

Their call was echoed by Rep. John McHugh (R-N.Y.), who reintroduced his "Postal Modernization Act" with a promise that it would undergo quick hearings.

"Despite annual surpluses of hundreds of millions of dollars, the Postal Service has decided it needs hundreds of millions more with little or no explanation of how this will improve our postal service," said Charmaine Fennie, chair-man of the Coalition Against Unfair Postal Competition.

The penny increase in the former 32-cent stamp and higher prices for other postal services will cost business and residential consumers $1.6 billion annually, Ms. Fennie said. The new rates went into effect Jan. 11.

James Kelly, chairman of United Parcel Service, criticized his chief rival for package deliveries for subsidizing a number of its products, including parcel post and international package delivery. He also lashed out at the Postal Service requirement that other package delivery companies double their prices for products that compete with Priority Mail.

"The Postal Service doesn’t want consumers to know about the ‘two-times rule,’ " Mr. Kelly said. "They advertise the price difference between Priority Mail and our Second Day Air, but they don’t tell you that in many cases, we have to charge twice what they charge because its the law.

"We stand ready to compete with the Postal Service on a level playing field in the marketplace," he said.

Norm Scherstrom, spokesman for the Postal Service, said UPS and other critics are upset because the agency is giving them a run for their money.

"Four or five years ago, the Postal Service was deeply in the red, service was in trouble, customers were dissatisfied and prices were spirally above inflation. At that time, our competitors had no problems with us," he said.

"Today, after monumental change and four years of record financial performance and record service as audited by outside parties, and after a record four years without rate increases, now you have competitors complaining about rate increase and service and it makes you ask why," Mr. Scherstrom.

The turnabout has the Postal Service coffer doing quiet well. In the first quarter of the federal 1999 fiscal year, the agency reported profits of $611 million. Since 1995, it has racked up about $5 billion in profits.

For the full story, see the Jan. 18 print edition of Transport Topics. Subscribe today.