Thrusday, January 07, 1999

Postal boost to bring deluge

Some firms rush mail to beat hike

The Cincinnati Enquirer

        Expect a tsunami of catalogs, advertisements and buy-now offers pouring from mailboxes between now and Monday.

        Businesses are scrambling this week to take advantage of 1998 mail rates before a U.S. Postal Service rate hike averaging 2.9 percent takes effect Sunday.

        “We have worked it out with our client base and have prepared mail in advance of the rate increase to take advantage of the economies,” said Tony Aveni, president of Harte-Hanks, a multinational firm that specializes in direct-mail, database marketing. The company moves 500 million pieces of mail a year from its Oakley facility.

        “Yes, there will be a few who will take advantage of the (old) rates,” said Charles L. Caton, district manager for the Postal Service in Cincinnati.

        Harte-Hanks officials think the hike will be benign for its customers. “Our clients are not going to be upset by this,” Mr. Aveni said. “It's going to be a nonevent — a modest rate increase.”

        Mr. Caton said new reve nues will buy more automated equipment, new post offices, and more routes — and could even lead to faster mail delivery.

        “We are no different than any other business,” he said. “There is inflation and the need for improvement. If we improve mail flow by one day, businesses can have a longer float with their money and in turn reduce charges back to the customer.”

        While first-class rates as of Sunday will rise a penny to 33 cents for the first ounce mailed, the second-ounce rate falls a penny, to 22 cents.

        The new rate means annual mail costs for Cinergy, for example, will rise by $180,000, or 3.8 percent more in 1999 than the $4.7 million spent annually to distribute 18 million utility bills. Sunday's hike will be the first first-class mail rate increase since January 1995.

        “It will not be significant enough to result in a rate

        hike on our total system for Cinergy,” said Steve Brash, Cinergy spokesman.

        While some firms might immediately pass on the increase to consumers, local television cable companies cannot. Cable rates are already in place, said Jennifer Mooney, vice president of public affairs for Time Warner Cable's Cincinnati division.

        “We have established rates for 1999, and those rates will not change,” she said. “The reality is we mail 225,000 pieces of mail per month. We also mail marketing pieces, promotional opportunities, customer information and education guides.

        “(The postal rate increase) won't just get loaded in, but it is a continuing cost of doing business, and we will find a way to cover those costs,” Ms. Mooney said. “We have a competitive situation and must keep our rates reasonable.”

        Mel Less, president and chief executive officer of the Greater Hamilton Chamber of Commerce, said he was concerned about the “ripple effect” postal service regulations and rates could have on small businesses — particularly recent rules requiring companies to buy new equipment for postage meters.

        “Most businesses say, "Oh yeah, postage has to go up,' but does anybody consider the additional costs that businesses will have to go through?” Mr. Less said.

        Cincinnati Bell expects to maintain or perhaps reduce postage costs next year by streamlining mailings and shrinking volume, said Libby Korosec, communications manager. “We are looking to control our costs,” she said. “About two-thirds of our mail falls into the one-ounce rating.”

        The telecommunications company mailed 9.8 million pieces in 1998 at a cost of $3.2 million.

        The postal service's Mr. Caton said companies that pre-sort mail by ZIP code will get discounted first-class rates. That is embraced by firms such as Firstar Corp., a $38 billion bank holding company. Star Bank is a subsidiary of Firstar.

        Reducing volume is another option under consideration.

        “People in operations are taking a hard look at what we mail, how we mail and why we are mailing things,” said Steve Dale, Firstar spokesman.

        Jim Griffin, spokesman for Fidelity Investments, said the regional operating center on Magellan Way in Covington mails 200 million pieces of first-class mail annually. All the investment company's North American mail leaves the Covington facility. The price increase will not go unnoticed, he said.

        “It will impact (costs) a little — a penny on a lot of pieces of mail,” Mr. Griffin said.


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