Newspaper article St Louis Post-Dispatch (MO)

Some Cheer, Others Cry at Postal Rate Increase

Newspaper article St Louis Post-Dispatch (MO)

Some Cheer, Others Cry at Postal Rate Increase

Article excerpt

As soon as word hit that the U.S. Postal Service would be asking for a 10.3 percent increase in rates, some companies began to count their blessings, while others began to count their change.

Relief settled in at DIMAC Corp. of Bridgeton, a big user of the post office here. "We're very pleased," said Chief Executive Michael McSweeney. Granted, he said, the best news would have been no increase. But the rate proposed is lower than the inflation rate over the last four years, "and there is not another common carrier in the United States that can claim that," he said.

DIMAC spends more than $50 million annually with the Postal Service, mailing advertising and customer communications for companies like AT&T and Blockbuster.

McSweeney said he and other direct mailers had been working through the Direct Marketing Association to get a postal proposal they could live with. McSweeney is chairman of the group's government affairs committee.

Some other area companies looked at the same rate proposal and cringed. Grant Williams, head of women's-wear cataloger Knight's Ltd., was one of those.

This year's rate proposal comes on top of two previous rate increases that were well above the rate of inflation, he said. The enormous investments the Postal Service has made that were supposed to result in labor savings have had no measurable effect, he said.

Meanwhile, Knight's would definitely feel the impact from a 10.3 percent jump, he said. Using this year's postal budget of $6.5 million as an example, the increase would add $669,500 in costs, he said. The company sends out about 35 million catalogs a year at 19.5 cents apiece.

Williams says he remembers mailing catalogs for 7.7 cents apiece in 1977.

A rate hike does more than just raise the cost of sending Christmas cards, he said. "All these companies that use the mail and use it daily have to pass those cost increases on. It doesn't just cost us, it ultimately costs the consumer and our entire economy."

If the new rates become effective, he said, Knight's may begin to send its catalogs through alternative delivery services - the kind that drop packets of magazines and advertising on your front porch. …

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