The Times West Virginian

Opinion

May 14, 2009

Rate hikes alone won’t solve USPS financial woes

We’re now digging for a little extra change during our visits to the post office.

The price of a first-class stamp, effective last Monday, climbed to 44 cents. It’s the third straight year rates have gone up in May under a new system that allows annual increases as long as they don’t exceed the rate of inflation for the year before.

Other changes also took effect this week:

• The postcard stamp increased 1 cent to 28 cents.

• The first ounce of a large envelope increased 5 cents to 88 cents.

• The first ounce of a parcel increased 5 cents to $1.22.

• New international postcard and letter prices are, for one ounce, 75 cents to Canada; 79 cents to Mexico; and 98 cents elsewhere.

Most Postal Service shipping services prices were adjusted in January and did not change.

These rate increases alone, though, will not solve the financial problems plaguing the U.S. Postal Service.

It ended the second quarter (Jan. 1-March 31) with a net loss of $1.9 billion. USPS officials blamed the economic recession and longer-term financial pressures, such as the diversion of letter mail to the Internet, that continued to reduce mail volume and revenue. The Postal Service, officials predict, will likely face a cash shortfall of over $1.5 billion at the end of the fiscal year.

The Postal Service, according to its Wed site, has incurred net losses from operations in 10 of the last 11 quarters. The year-to-date net loss is $2.3 billion, compared to a loss in the same period last year of $35 million. A significant portion of the losses over this period can be attributed to an unprecedented decline in mail volume. In the second quarter, mail volume totaled 43.8 billion pieces, down 7.5 billion pieces, or 14.7 percent, compared to a year ago.

“The economic recession has been tough on the mailing industry, and we have seen an unprecedented decline in mail volumes and revenue that continued to accelerate during the second quarter,” said Postmaster General John Potter. “We are aggressively realigning our costs to match the lower mail volumes, while also maintaining the high level of service and reliability our customers expect. We are also taking a number of steps to grow revenue.”

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