USPS Proposes 7.1% 1st Class, 13.8% Priority Mail Rate Increases

[mandy]

Mailers expecting the next postal rate case to be filed this week shouldn't hold their breath.

Though Postmaster General John E. Potter has said that the U.S. Postal Service plans to file the case with the Postal Rate Commission as soon as this month, a source inside the USPS said it won't be filed until May or later.

The USPS Board of Governors is expected to discuss the filing of the rate case at its May 2-3 meeting in Washington, DC. Many think the filing will be authorized at the meeting, but some say authorization could come afterward...

Regardless of when the case is filed, many mailers anticipate a big rate increase. For one, the agency said it cannot continue to absorb the high fuel and healthcare costs...

full article: http://www.dmnews.com/cgi-bin/artprevbot...e_id=36559

Thread title edited by Regic 5/3/2006

[thentavius]

Let me guess. If the gas prices go back down, the postal prices stay up, up, up.

[regic]

May 3, 2006

POSTAL SERVICE SEEKS PRICE ADJUSTMENTS
Governors propose "forever stamp"

        * Price for a First-Class stamp stays at 39 cents for another year
        * Postal Service not immune to rising fuel and health care costs
        * Average household affected by only 50 cents per month

    WASHINGTON – The Governors of the U.S. Postal Service today proposed a "forever stamp" as part of a broader rate adjustment plan that would be scheduled to go into effect next year. Customers would be able to purchase a special First-Class stamp which would be good for any future single-piece First Class letter mailing, no matter how prices might change beyond 2007.

    "A forever stamp would help ease the transition to any future price adjustments," said Board of Governors Chairman James C. Miller III.

    On the broader plan, the Governors cited increasing costs for fuel and health care as among the reasons for today's filing with the independent Postal Rate Commission (PRC) for price adjustments next year. The plan includes a three-cent increase in the price of a First-Class stamp. The annual affect is well below $6 for the average household.

    "The Postal Service is not immune to the cost pressures affecting every household and business in America," said Postmaster General John E. Potter. "However, by the time new rates take effect next Spring, the cost of a First-Class stamp will have increased by an average of just a penny a year during the last five years, less than many other consumer products and services.

    As one of the nation's largest transportation and delivery organizations, the Postal Service is extremely sensitive to rising energy costs. It operates a fleet of more than 260,000 delivery vehicles, supported by air transportation contracts, more than 17,000 long-haul surface transportation contracts and a network of more than 37,000 facilities.

    Like other businesses, the Postal Service has also experienced significant growth in health benefit payments for more than 621,000 current employees and 445,000 retirees. In 2005 alone, these costs increased by $437 million, reaching a total of $6.6 billion.

    When new rates are implemented in 2007, the price of a stamp will have grown at or below the rate of inflation since the last operational rate adjustment in 2002 – and since today's Postal Service began operations in 1971.

    Postal Service operations are funded solely by the sale of products and services, not by tax revenues. While other delivery services have responded to growing costs with fuel surcharges and annual rate increases, today's filing is the first time since 2002 that the Postal Service is proposing to adjust rates to cover growth in operational costs. A January 2006 rate increase was implemented solely to fund a $3.1 billion escrow account required by a 2003 federal law. Congress has not yet determined how the Postal Service may apply these funds.

[regic]

The price increases are large for packages

2 oz package, 1st class:
current $0.63
proposed $0.82 for 2 oz. package
proposed $0.62 for 2 oz. letter

6 oz. package, 1st class
current $1.59
proposed $2.00 for 6 oz package
proposed $1.62 for 6 oz flat

POSTAL SERVICE PROPOSES NEW APPROACH TO SHAPE A MORE EFFICIENT FUTURE
Reshaping mail allows businesses to reduce costs

    WASHINGTON – The U.S. Postal Service has unveiled proposed new pricing incentives that would effectively reshape the future of mail and provide benefits to both business customers and the Postal Service. The current pricing structure for postal products relies primarily on a weight based system. The new plan – sent to the Postal Rate Commission (PRC) as part of a 2007 price adjustment proposal package – combines weight with shape to allow the Postal Service to better align prices with processing costs to ensure every type of mail covers its costs. Price changes would not occur before May, 2007.

    Current Postal Service prices do not distinguish between some letters, flats, and parcels. For example, in First-Class Mail, the current single-piece price is 63 cents to mail a 2-ounce letter, a 2-ounce flat, and a 2-ounce parcel. The new plan recognizes that each of these shapes has substantially different processing costs and should have different prices.

    The new pricing plan, in effect, creates an adjustable rate system by giving mailers the opportunity to obtain lower rates as they find ways to configure their mail into shapes that reduce processing costs for the Postal Service. For example, if the contents of a First-Class flat can be folded and placed in a letter-sized envelope, the mailer can reduce the postage by as much as 20 cents per piece. If a First-Class parcel can be configured as a flat, the mailer will save 36 cents.

    As the Postal Service emphasizes shape in its pricing, it also proposes to reduce the additional ounce rate. As mail pieces become heavier, the proposed price increase declines. For letters over one ounce, the new prices are actually lower than today's prices.

    "Our pricing proposal recognizes changes in underlying costs and market conditions, and includes pricing initiatives to improve efficiency, which helps keep rates affordable for everyone," said Postmaster General John E. Potter. "We will work closely with our business mailers in the coming months to show them how they can take advantage of the new pricing to keep their mailing costs as low as possible," added Potter.

    The following chart illustrates the many opportunities to mitigate price increases as business mailers help the Postal Service to shape a more efficient future:

Chart: http://www.usps.com/communications/news/...06_032.htm

[regic]

Proposed increases:
Standard Mail will increase 9 percent
Priority Mail 13.8 percent
Express Mail 12.5 percent
package services 13.4 percent
special services 11.2 percent
First Class mail will go up 7.1 percent to 42 cents

plus the dimensional increases in my previous post

[iron_chick]

Did somebody forget to tell the USPS that they just freakin' raised rates?? 

[mandy]

The Magazine Publishers Association is already planning litigation over the rate hike:

"We are concerned about the magnitude of the proposed increase," said Nina Link, president-CEO of the Magazine Publishers of America. "Our rates just went up 5.4% in January. So if the Postal Service gets its way, by early next year, we will have incurred a compounded increase of 17.4% in less than a year and a half. This increase is on top of the compounded increases of about 24% that magazines sustained from 2000 to 2002."

Litigation planned by MPA
Jim Cregan, MPA's exec VP-government affairs, said the group would "aggressively litigate" the increase at the Postal Rate Commission.

http://www.adage.com/article?article_id=108985

[amy]

The price increases are large for packages 

2 oz package, 1st class:
current $0.63
proposed $0.82 for 2 oz. package
proposed $0.62 for 2 oz. letter

6 oz. package, 1st class
current $1.59
proposed $2.00 for 6 oz package
proposed $1.62 for 6 oz flat

The 2 sizes I ship the most often-- 2 oz. postcards (with packing peanut to qualify for delivery confirm so I can avoid having LSOSB PayPal users file false claims) and 6 oz. CDs.  I'm looking at a 25%-30% hike in first class rates not 7.1%  >

The 3rd size I use: Priority mail 1 lb. from $4.05 to $4.60. 

[maggie777]

Passing these increases along to customers will partially erase the price advantage on many products of shopping online versus offline.

[valleygirl]

I'll shift more of my shipments to UPS to minimize the impact.