Rising Costs Blamed for Postage Rate Increase

"Not one penny of that went to us," Mike Holloway of the USPS said in reference to the last postage rate increase in 2006. Holloway, District Manager for the Central Plains District, said that last year's rate increase was to fund a military pension escrow fund mandated by Congress. "All funds from that rate increase went directly to an escrow fund controlled by Congress," Holloway said. Holloway's statements were part of his presentation to the Wichita Postal Customer Council in October.

Holloway continued by defending the impending rate increase expected May 2007. Holloway cited rising fuel costs for their more than 260,000 delivery vehicles and heating 38,000 facilities. Holloway said that every one cent of increase in the cost of a gallon of gasoline increases USPS fuel costs $8 million.

Holloway also pointed out that 78 percent of the USPS costs are labor and they must also deal with rising health care costs for their 1 million employees.

Due to what he called "electronic diversion" of First Class Mail, Holloway said that the Internet and email have caused a drop in First Class Mail volume and Standard Mail volume now outpaces First Class Mail.

The USPS is doing many things to control and cut costs. Holloway said in the Central Plains District, 86 percent of all mail is handled entirely by automation equipment. Holloway also reminded PCC attendees that postage costs seem to be rising quickly but they are actually at or below the inflation rate.

Mike Matuzek, USPS Western Area Manager, was also a speaker at the Wichita PCC Expo. Matuzek does not believe the latest postal reform bill will pass. "That means the USPS will continue to operate under the same model that was created in 1970, the last postal reform," Matuzek said.

Matuzek dispelled several USPS myths such as First Class postage is used to subsidize other lower-profit USPS products such as package services. "It is mandated that each product be self-supportive meaning it must pay for itself," Matuzek said. Matuzek added that the myth of a USPS monopoly on First Class Mail is also inaccurate. "We do not see First Class Mail as a monopoly," Matuzek said. Matuzek considers telephone, fax, Internet, and email as competing services to First Class Mail.