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Postage Rates Increase, With More Possibly on the Way

January 16, 2006

(Jan. 17, 2006) The 5.4 percent postage rate increase that hit nonprofits on Jan. 8 might just be the tip of the iceberg.

According to the Alliance for Nonprofit Mailers, it is highly likely that the United States Postal Service will file another rate increase to take effect in early 2007. That increase may be substantially higher than the one recently enacted, perhaps a 7 to 8 percent increase or higher.

Passage of postal reform in 2006 might alleviate the need for another rate increase in 2007. However, given the vast differences between the House and Senate versions of the postal reform bills and the problems the White House has with the legislation, passage of the legislation does not seem likely now.

The 2006 Increases

Effective Jan. 8, charities using the Nonprofit Standard presorted and automation letters and nonletters are seeing rate increases of approximately 3 percent. The rates for Nonprofit Periodicals are increasing by 4.5 percent.

Organizations using Nonprofit Enhanced Carrier Route (ECR) mail are experiencing the largest increases--12 percent or more. However, ECR rates are still 40 percent less than commercial equivalents and substantially less than other Nonprofit Standard rates. In addition, ECR mail accounts for a relatively small percentage of all nonprofit mail.

Despite the increases, the Postal Rate Commission's recommendations are far more favorable to nonprofits than what the United States Postal Service (USPS) originally requested. According to the Alliance, assuming that the USPS Board of Governors accepts the recommendations, nonprofits will save approximately $16 million compared to the USPS plan.

Part of the increase includes a 2-cent increase in the cost of a first-class stamp, while the rate for postcards rises to 24 cents. The increases will enable the USPS to meet a $3.1 billion escrow payment due in 2006.

Other Increases

United Parcel Service (UPS) published Daily Rates will change as follows in 2006: Commercial Ground will increase 3.9 percent, and UPS Air and International Services will increase 5.5 percent.

There are also additional adjustments to other charges in 2006. The residential surcharge for UPS ground will increase by $0.25. The residential surcharge for UPS Air Services and UPS 3 Day Select will increase by $0.35. The Additional Handling charge and the charge for Collect on Delivery service will increase by $1 per package.

A complete list of 2006 rates is available at the UPS website.

For FedEx, Express package and freight rates will increase an average of 5.5 percent for U.S., U.S. to Puerto Rico and U.S. export services. FedEx Ground and FedEx Home Delivery rates will increase an average of 3.9 percent.

For more information on FedEx rates, go to the FedEx website.

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