Associated Press
WASHINGTON — The terrorist attacks and the slipping economy combined to cause the biggest drop in mail volume in more than 30 years, the U.S. 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 Strasser Jr.
That was the biggest drop 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 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, D.C. 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 Potter said.
Nonetheless, officials noted that the post office now delivers to 138 million locations daily, up 1.7 million over the past year.
Postal officials also said they have not yet decided when the cleanup of the anthrax-contaminated Brentwood facility in Washington will get under way.
In other action, the board:
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