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As Rate Rises, Can Postal Service Deliver?

Mail: The latest increase may not be enough to solve budget and operational problems.


WASHINGTON -- The U.S. Postal Service blames a combination of e-mail competition, the anthrax scare and the recent recession. Mailers blame the postal service's own ability to cope.

But whatever the reason, the price of mailing a letter is about to go up again.

The first-class letter that now costs 34 cents will cost 37 cents as of Sunday. That three-penny increase is the largest in the steady price climb of recent years and was the entire cost of mailing a letter as recently as 1932.

And even the latest hike--nearly 10%--may not be enough to balance the postal service's budget against an anticipated $1.5-billion loss this year.

Postal officials worry that the increase won't help because the volume of mail may be falling faster than the price is rising.

For The Record
Los Angeles Times Tuesday July 09, 2002 Home Edition Main News Part A Page 2 National Desk 6 inches; 244 words Type of Material: Correction
Postage rates--An article in Section A on June 29 about the recent postal-rate increase said postage for a first-class letter was 3 cents as recently as 1932. In fact, that was the postage cost for a first-class letter until July 1958.

"The model we're operating under now just isn't sustainable," postal service spokesman Garry Kreinkamp said. He worries that the day is not far off when price increases hurt more than they help.

Moreover, the cost and effectiveness of some signature post office services have come into question in a March report by the Office of the Consumer Advocate, an arm of the independent Postal Rate Commission, which represents the interests of the public. The report cited a range of problems, from the availability of window clerks to Priority Mail service.

The report suggests that the post office misleads customers into using Priority Mail, a more costly service that promises delivery in two to three days for letter-weight items. But the report said delivery times for priority and first-class mail are equal because they are shipped together--even though investigators were told Priority Mail would be shipped using the Express Mail network.

Priority Mail took as much as three days longer to be delivered than advertised, said Shelley Dreifuss, director of the office that produced the report. "The postal service hasn't really been providing services of as high a quality as they ought to," she said. "If you can't live up to your promises, then at least tell the public honestly what you are able to offer."

Kreinkamp said the differences between the two services are technical. A package that weighs more than 13 ounces must be sent by Priority Mail. "Priority Mail is first-class mail, it's just heavier."

He said the report overlooked key factors, such as weight and longer-distance destination, causing delays in delivery. Half of all letters and other first-class mail circulate within the city of origin, but Priority Mail typically does not, he said.

The postal service has argued that it needs greater flexibility and less governmental oversight to compete with private companies.

Some critics suggest that these grievances are just the tip of the iceberg.

Jack Estes, head of Main Street Coalition for Postal Fairness, a nonprofit group that represents the interests of individual and small-volume mailers, said the postal service needs a fundamental restructuring. The service should focus more on cutting labor costs than raising prices, he said.

But, he said, "by and large the postal service has done a pretty good job, given the tasks they're faced with."

After six years of failed attempts to push postal reforms through Congress, however, Main Street recommends the creation of a commission to develop solutions.

Postal service customer Chino Cardova, a security officer in Washington, said he understands why the prices keep rising, but added: "I just think they need to get their house in order instead of sticking it to the consumer."

Estes said that allowing the postal service to operate more like a business than a government agency is risky for consumers.

"I can't think of any company that would take on universal service--coast to coast--that would offer nondiscriminatory services," he said. "I think that most Americans look upon mail almost as an entitlement. They feel they're entitled to send and receive their mail at a nondiscriminatory price."

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