Postage increase not leading to much upset in the business world

by Staff Writer

Published: January 15,2001

JACKSON — The increase in postage has not led to total upset in the business world, in part because they were warned of the rate change before it took place, but it has changed the way some people are conducting their business.

“Most of our businesses stay abreast of what’s going on, so they’re not hit at the last minute,” said Gale Purvis, customer relations coordinator at the Jackson Post Office. “Our local Postal Business Center works with our major marketing customers, and they keep them aware of the rates.”

Purvis said businesses find out about a year in advance of the possibility of a change in rates.

“When we file for a rate increase, it can take up to 14 months for the whole process to go through,” she said. “Within the last several months, we have been working with our business customers. They stay right up to date with us.”

The last increase in postage, also by one cent, occurred in 1999. Purvis explained the need for the increased rates.

“Like any other business company, when things go up, it affects the postal service nationwide.”

And while most people are asking the postal service to up their rates more than one cent in order to avoid having to increase rates again any time soon, Purvis said that cannot be done.

“By law we’re mandated that each class of mail only pays for its own rate,” she said. “We can’t make a profit off of it. That’s why we only go up a little at a time.”

Then there are some rates that have gone down at the post office, like the first additional ounce on a first-class letter.

The post office is not subsidized by any tax dollars, which means that when operating expenses go up, just like any business, rates have to go up.

“I haven’t heard a lot of negative comments,” Purvis said. “I really think that when we do have a rate increase, it’s such a minimum increase that I haven’t had any negative comments.”

Local companies that have felt the brunt of the U.S.P.S. rate increases include, among others, Postage Savers Inc., and AmeriMail Direct. But company executives at both places say it has not put much of a strain on business.”

Gene Davis, vice president of Postage Savers, said, “We specialize in automating people’s mail. The savings spread has remained the same. The motivation for people using businesses such as ours remains the same.”

Davis said that the extra cent-and-a-half increase on pre-sorted mail would affect his industry, but that the biggest thing is the one-cent increase that affects his customers’ net cost.

“The discount spread remains the same,” he said. “It (the rate increase) would probably even motivate people to use our industry more to get some kind of savings from it.”

Cleve Payne, operations manger at AmeriMail Direct, has known the rate increase would be coming for some time.

“We don’t see a big effect on our business,” he said. “Mailers focus on making every postal dollar count. At one time people would just mail to anyone and everyone. Now we see more targeted campaigns and (people) trying to keep data clean.”

Payne said he always tries to look at his clients’ data to make sure it is clean.

“As a result (of the rate increase) they ask if there’s any way to cut the cost. It affects everybody’s bottom line.”

The U.S.P.S. is not the only mailing service that has had to increase its rates. UPS and FedEx have also increased their rates as well.

According to a press release dated Dec. 28, air express rates for UPS Next Day Air, 2nd Day Air and 3 Day Select will increase 3.7%. UPS Commercial Ground services will increase 3.1% across all weights and zones. The residential surcharge has been changed from $1.00 per package to $1.05 per package. UPS international export rates from the U.S. will increase 2.9%.

And the temporary fuel surcharge of 1.25%, which was implemented by UPS in August 2000 to compensate for unusually high oil and fuel prices, will remain in effect with the hope that fuel prices will eventually stabilize at lower levels.

“UPS remains focused on providing exceptional value through a complete range of time-definite transportation services, all of which are backed by the industry’s most innovative technologies, global logistics solutions, and financial services,” said John Beystehner, UPS senior vice president of marketing and worldwide sales.

FedEx’s announcement of its rate increases came Dec. 27. Its 4.9% increase of list rates for shipments within the U.S. will become effective Feb. 1. U.S. exported shipments (shipments going overseas) will receive an average increase of 2.9%.

T. Michael Glenn, executive vice president of market development and corporate communications at FedEx, said “The value that FedEx provides in streamlining customer’s supply chains, with speed and information replacing working capital and inventory, is increasingly important in today’s economic environment. This rate adjustment ensures that FedEx Express will continue to provide the outstanding service and value, backed by the user-friendly technology, that customers expect from FedEx.”

Steve Barber, FedEx senior communications specialist, media relations, felt the company would maintain its market share by providing services that people have become accustomed to.

Contact MBJ staff writer Elizabeth Kirkland at ekirkland@msbusiness.com or (601) 364-1042.


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