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1st-Class Stamp Likely to Cost 32 Cents in Rate Increase : Mail: The boost is part of an overall 10.3% hike. The higher fees would take effect in January.

November 09, 1994|ROBERT A. ROSENBLATT | TIMES STAFF WRITER

WASHINGTON — Postal rates will rise in January, with the standard first-class stamp jumping to 32 cents from 29 cents, the chairman of the Postal Service warned Tuesday.

"Our customers should plan accordingly," Sam Winters, the chairman, said during a meeting of the Postal Service Board of Governors.

The Postal Service already has applied for a 10.3% rate increase for all classes of mail. The independent Postal Rate Commission is expected to announce within a few weeks its ruling on the rate request.

Approval is widely expected, and postal officials, along with most big mailers, have been assuming that the higher rates would take effect on Jan. 1.

But Winters made it virtually official Tuesday, promising that the new rate structure will begin with the New Year.

Anticipating the higher rates, many big advertisers, mail-order merchandisers and mass mailers will send out tons of extra mailings late this year to take advantage of the current rates.

For any people who might have been hoping that the rate hike would take effect sometime after Jan. 1, Winters' remarks are likely to serve as a wake-up call.

"We're aware of our customers' interest in a probable implementation date for the new rates," Winters said.

After the rate commission announces its decisions, he said, the board of governors will act "in a most timely manner."

The rate increase would be the first since 1991, when the price of a first-class stamp rose to 29 cents from 25 cents.

Postal rates have tended to follow a three-year cycle.

The Postal Service typically makes a profit during the first year after a rate increase, then breaks even during the second, and suffers an operating loss at the end of the third year.

Postmaster General Marvin T. Runyon Jr., who took office in 1992, has extended the traditional cycle into a fourth year, delaying the request for a rate hike.

Proposed rate increases usually are contentious, with competing groups of mailers trying to negotiate lower rates for themselves by shifting more of the burden to other classes of mail.

This time, the big mailers, including magazines, newspapers, catalogue publishers and direct marketers, supported an across-the-board rate hike of 10.3%.

In return, the Postal Service promised to conduct a major study to re-examine the classification and pricing system that has remained largely unchanged since the Postal Service became independent in 1971.

The 10.3% increase "is below inflation and will provide just enough revenue on which to operate the Postal Service," Winters said. "For that reason, the governors hope to implement the rates as early as practical in January, 1995."

Postal officials expect a favorable decision from the Rate Commission by the end of this month.

The Postal Service Board of Governors and many members of Congress will be watching the system's performance closely during the busy holiday mailing season, which began in October.

Runyon has come under intensive criticism for problems with mail delivery in many metropolitan areas, including Washington, D.C.

The Postal Service has established a target of 95% "on-time" delivery for first-class mail, but actual performance has fallen far short in many localities.

The on-time standards require overnight delivery of mail within a single metropolitan area, and no more than three days for coast-to-coast mail.

Overtime hours have risen sharply, and the Postal Service is hiring new employees in an effort to improve service.

A strong national economy will cause mail volume to increase by an estimated 6% yearly, straining a system that distributes about 170 billion pieces of mail to more than 120 million addresses annually.

The added burden of holiday catalogues, cards and advertising, plus growing business mail will combine to offer a major management challenge to Runyon and his organization.

In addition to expanding its work force, the Postal Service is renting millions of square feet of storage space and hiring a fleet of aircraft to help with the huge volume of mail for this season.

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