Regulators approve US Postal Service price increases set for April

Postal regulators in the United States have given the green light to Postal Service price changes planned to take effect from 26 April, 2015.

The Postal Regulatory Commission approved both adjustments to First Class Mail services as well as for competitive express and parcel shipping changes.

The First Class Mail retail service will remain at 49c, but with additional ounces increasing from 21 to 22c, and postcards rising to 35c.

On average, First Class Mail rates will rise by just under 2%, with presorted letter and card rates rising by 2.422%, flats by 2.437% and parcels 10.18%.

Other changes in the monopoly side of the business will see outbound international single-piece First Class Mail letter rates rise by 5c (or 4.399%) to $1.20, with outbound international postcards also rising to $1.20.

The changes include the “exigent” temporary surcharge designed to help USPS counter the financial impacts of the 2008-09 recession.

The Postal Service had proposed back in January a range of changes to its monopoly service prices, but the regulator has deferred approval for rate changes to Standard Mail, Periodicals, monopoly Package Services and Special Services (such as address correction), requiring more information from the Postal Service.

Competitive services

On the competitive side of the business, the Postal Regulatory Commission approved proposals to maintain current pricing for both retail and commercial Priority Mail and Priority Mail Express services

Prices will increase for other domestic parcel shipping services including Parcel Select (up 9.8% on average, depending on options), Parcel Return Service (up 4.8% on average) and First Class Package Service (up 5.1%).

First Class Package Service is currently a monopoly product that USPS is requesting be moved to the competitive portfolio to give it more pricing flexibility, and the Commission is still reviewing the request. If it is allowed, prices would rise by 22%.

Other price increases include Standard Post (up 11.3% on average), and various Special Services such as Premium Forwarding Service (up 5.9%).

International shipping services will also see price increases, including Global Express Guaranteed (up 7.2%) and Priority Mail Express International (up 6.7%).

Priority Mail International will see prices rise by 5.5%, with International Priority Airmail rising by 4.5% and Airmail M-Bags by 6.8%. First-Class Package International will see a 7.2% price increase.

“Strength in our system”

Speaking at the Direct Marketing Association’s Washington Nonprofit Conference yesterday, the acting chairman of the Postal Regulatory Commission, Robert Taub, commented that the Postal Service was starting to see modest increases in revenue, particularly driven by growth in its shipping and package services, propelled by e-commerce.

“In the postal world,” he said, “we’ve been hearing nothing but bad news. I want to highlight, there is good news and strength in our system. The Postal Service as you all know, is a key cog of a marketing and distribution system through which small and large businesses, nonprofit organizations, and consumers can transact business, advertise services, and distribute products.”

According to preliminary unaudited figures for January 2015, the Postal Service has grown its revenue by 3.7% in the year-to-date (starting 1st October), to $24.6bn, but increases in operating costs have seen losses worsen year-on-year by 54% to $2.1bn.

Mail volume grew by 0.5% year-on-year in the four months, while shipping and package volumes grew by 11% compared to the same period last year. The important First Class Mail service saw its revenue up 4.1%, while volumes dropped by 0.5% in the four months compared to the same period in the previous year.

The Postal Service has told regulators that monopoly service price increases should bring in about $400m extra in revenue this year, with competitive service price changes adding an additional $315m.

Source: Post&Parcel/PRC/USPS

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