Postage rates are headed up, and in rural Alaska, it matters

McClatchy NewspapersMarch 9, 2009 

WASHINGTON -- Postal rates are scheduled to rise nationwide in May, and that means an increase in the cost of shipping rates for bypass mail services to rural Alaska.

Postal officials say the cost of bypass mail shipping could see a 6 percent to 50 percent increase, depending on where the mail is shipped from — and where it's going.

"I know it's a large increase, but it's not just in bypass," said Darus Macy, a U.S. Postal Service spokeswoman in Anchorage. "The rates in Alaska, the new rate is still less than what we pay to transport that mail to those communities, part of that is subsidized already."

For example, Macy said, to ship from Anchorage to Cold Bay via bypass mail costs about $15.09 for every 68 pounds of cargo. That rate will increase to $22.08 per 68 pounds under the proposal being considered by the Postal Regulatory Commission. But the actual cost to the postal service is $153, Macy said.

The state's congressional delegation and Gov. Sarah Palin have asked the U.S. Postal Service to intervene, saying they're concerned about the effect of the new rates on rural communities where people depend on the service but can least afford a price hike as they face rising fuel costs and increasingly dire economic conditions.

The U.S. Bureau of Indian Affairs announced plans this week to send $20,000 in emergency cash to the village of Emmonak to help villagers who are struggling to pay for food and fuel after a poor fishing season. The plight of some of the people in the village of 800 elicited a flood of donations in recent weeks, after a letter describing the plight of some of the people in the town circulated on the Internet.

"Residents of the most remote parts of our state are struggling with high fuel prices and the ability to provide food for their families," Palin wrote in a letter to the Postmaster General. "This postal rate increase has an exponentially greater impact on Alaskans than those in other states due to the reliance of Alaskans on the bypass mail system for food and supplies."

Alaska communities have raised their objections too. The city of Bethel held an emergency meeting last week to pass a resolution they could send to the Postal Regulatory Commission.

Many residents had been hoping to see lower prices on heating oil and gasoline this spring when supply barges return with fuel that's less expensive than it was last year, said Dan Leinberger, a city councilman who runs Kuskokwim Commercial Supply. But now, they fear the lower fuel costs will be offset by a higher overall shipping rate.

He cites as an example his cost of supplying soda to restaurants. The new bypass rates will add another $2 to the cost of a case, Leinberger said.

"That's not any profit to me, or Coke or Pepsi," he said. "That's just simply the cost of getting it from Point A to Point B."

But it's unlikely the U.S. Postal Service will be able to do much, since it is grappling with a deficit that grew past $2 billion last year. The bypass mail rate will be part of an overall rate increase the increases the cost of stamps two cents, to 44 cents.

Spokesman Dave Partenheimer said the U.S. Postal Service appreciates input from the congressional delegation and the governor. They're "aware of the unique circumstances they describe," in Alaska, Partenheimer said, but "don't expect the new prices that we announced last month to change."

However, Partenheimer said, the postal service is also looking at some options that would help mitigate prices. Cargo carriers have heard that those options might include offering bypass mail at the lowest possible prices assessed for high volumes of freight, known as a "weight break." It wouldn't avoid an increase but could keep costs in check.

Former U.S. Sen. Ted Stevens created the bypass mail program in the 1970s and was its staunchest congressional defender. Bypass mail is sent directly through shippers on air carriers, at Postal Service prices. Shippers pay parcel post rates -- among the cheapest shipping rates the Postal Service offers. They must ship a minimum of 1,000 pounds at a time.

Alaska Airlines and three of the other cargo carriers in the state also sent a letter to the congressional delegation outlining their concerns about the price increase. They estimated in their letter that it could raise the price of a gallon of milk $1.27 in Bethel and Dillingham and $1.47 in Nome and Kotzebue.

"When it comes to the state of Alaska, the impact on consumers out in the Bush communities is going to be substantial," said Joe Sprague, the vice president of cargo operations for Alaska Airlines. "They're already paying high rates for consumables and the situation has gotten so dire this winter."

The bypass system is an interconnected and fragile one, Sprague said. Because of the volume of cargo that they carry at the bypass mail rate, Alaska Airlines is able to provide passenger jet service to a number of rural Alaska communities where all-passenger service isn't economically feasible.

"We are able to operate those kind of aircraft because there is this huge volume of freight and mail going into these communities," Sprague said. "For the flight to be able to generate revenue off cargo and mail, that makes the model work."

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