Mail volume down nearly 3 billion at end of year; postal rate increase may be moved ahead

Tuesday, January 8th 2002, 12:00 am
By: News On 6

WASHINGTON (AP) _ The terrorist attacks and the slipping economy combined to cause the biggest drop in mail volume in more than 30 years, the Postal Service reported Tuesday.

The bleak news came amid negotiations between the post office and major mailers on an agreement that would allow the agency to raise rates on June 30, three months sooner than planned.

In the first quarter of its fiscal year _ Sept. 8 to Nov. 30 _ mail volume was 2.8 billion items below the same period last year, said postal Chief Financial Officer Richard J. Strasser Jr.

That was the biggest drop-off since the current postal service was established more than 30 years ago, Strasser said. It was led by advertising mail, which was down 2.2 billion items, costing the agency millions of dollars.

The proposed rate increase would boost the price of a first-class stamp 3 cents to 37 cents and raise other rates as well, bringing a flow of cash to an agency that lost $1.68 billion last year and faces billions in expenses for protecting the mail from biological contamination.

``A settlement looks promising,'' said Robert F. Rider, chairman of the postal governing board.

He said a majority of major mailers agreed to accept the proposed rate increase and he believes those who have not yet accepted the deal will do so _ or at least will not formally oppose the new rates.

The post office announced plans to raise rates on Sept. 11 _ minutes before the hijacking attacks in New York and Washington. Raising rates is a complex process that generally takes about a year.

Because of losses suffered by the agency due to the attacks, George Omas, chairman of the independent Postal Rate Commission, suggested the negotiated settlement.

Under the deal, the rates would take effect three months early in return for a promise that the agency would not seek another increase this year. The rate commission is expected to rule on any settlement by late March.

The busy pre-Christmas mailing period is normally a moneymaker for the post office, helping offset losses from slower times of the year. The reduced mail volume in September-November resulted in net income of $108 million for the three months, $521 million less than had been expected.

Strasser said the post office was able to cut expenses for the three-month period to $15.3 billion, $355 million less than originally planned.

During the past 15 months, he said, the post office has reduced its staff by 16,300 full-time employees and continues to make reductions.

Strasser's report covers September through November. Final figures for December were not immediately available but preliminary reports indicate the agency is about $552 million in the red so far this fiscal year.

``We will continue to trim costs; it cannot be business as usual,'' Postmaster General John E. Potter said.

Nonetheless, officials noted that the post office now delivers to 138 million locations daily, up 1.7 million over the past year.

In other action the board:

_Set 45 cents as the price for the new ``Heroes'' semi-postal stamp to raise funds for the families of those injured and killed in the terrorist attacks. Semi-postal stamps carry a surcharge in addition to normal postage to raise money for charity. The stamp will go on sale this year and continue to be sold through Dec. 31, 2004.

_Voted to raise the price of the breast cancer semi-postal from 40 cents to 45 cents when the first-class rate rises to 37 cents. The stamp has raised $22 million so far and will remain on sale until Dec. 31, 2003.

_Announced that a new semi-postal to raise funds to combat domestic violence will go on sale in January 2004 and remain on sale through 2006. No price was set.

_Re-elected Rider as chairman and David Fineman as vice chairman of the board.