The Ups and Downs of a Postal Rate Proposal

Almost every business would see its postage costs either rise or fall under a modified rate-overhaul plan issued in late January by the U.S. Postal Rate Commission to encourage mailers to prepare items for cost-saving automated processing. If the commission's recommended rates are allowed to take effect, bulk mailers1 postal rates would drop, provided they "workshare"—the U.S. Postal Service's word for affixing ZIP-coded bar codes to items and presorting them by destination. Rates for small-volume mailers, however, generally would rise under the plan. The rate commission is an independent body empowered by law to review and adjust rate changes sought by the Postal Service. Under the unusual postal ratemaking process, the rate commission's modifications are subject to approval by the Postal Service's Board of Governors.

The commission's recommendations are in line with a 1995 Postal Service proposed—with two key exceptions: The commission modified significantly the Postal Service's proposed realignment of the second-class rates applied to newspapers and magazines, and it rejected the proposed creation of several "subclasses" of bar-coded bulk mail. The commission's plan would affect the rates charged for all U.S. mail except first-class letters, whose first-ounce rate would remain 32 cents. Here are some highlights:

First-class mail: Companies that send personally addressed bulk mail, such as customer bills, would see rates drop about 2 cents per ounce if pieces are bar-coded and presorted by destination. Rates would increase by about 2 cents per ounce for presorted items that aren't bar-coded.

Second-class mail: About 800 publications with large, concentrated circulations and that meet bar-coding and other requirements would see their costs drop an average of 3.7 percent. But small-volume periodicals and many larger-volume periodicals would see an average price increase of 3.5 percent.

Third-class mail: Most bulk-advertising mailers would pay about 1 or 2 cents less per item if they use bar codes and presort their mail. A bulk mailer who presorts but does not bar-code would pay about 2 or 3 cents more. The cost to send mail that is presorted by carrier route would decrease by about half a cent per piece.

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