The U.S. Postal Service will raise rates in April for some market dominant services based on a Consumer Price Index (CPI) cap authority of 1.966%. While the price of a first class Forever stamp won’t change, each additional ounce will cost a penny extra, and international letters will increase in price by over 4%.
If the Postal Regulatory Commission (PRC) approves it, the rate changes will go into effect on April 26th. The filing does not affect Postal Service Shipping products and services.
Stamps for 1-ounce letters will remain at their current price of 49 cents, but the rate for each additional ounce will go from 21 cents to 22 cents. Letters to all international destinations will rise from $1.15 to $1.20. And postcards will rise from 34 cents to 35 cents.
The USPS said, “Using the CPI, we estimate that this price change will generate an additional $0.9 billion in contribution on an annualized basis,” and said it would improve the Fiscal Year 2015 financial outlook by $0.4 billion in contribution.
The key elements of the CPI case include the following:
- Above average price increases to address PRC concerns about underwater products.
- Special Services simplification to reduce redundancy and improve customer ease of use.
- Introduction of a separate Flats Sequencing System (FSS) pricing structure for Standard Mail and Periodicals.
- Introduction of Carrier Route bundle and container pricing for non-FSS flats for Standard Mail and Periodicals.
- Include four promotions (Earned Value Reply Mail, Color Transpromo, Emerging Technologies, Mail Drives Mobile).
Various industry webinars will be scheduled to offer depth and insight into the proposed changes.
The USPS said the January 15th filing is the latest in a series of steps it has taken through a comprehensive approach to achieve financial stability. “By growing volume, revenue and contribution, the Postal Service will continue to meet the nation’s mailing and shipping needs into the future. While improving efficiency in streamlining its network and seeking legislative changes, the Postal Service must also address an outdated business model.”
It said the filing addresses the PRC’s concerns about products that don’t cover their own costs and simplifies Special Services to make them easier for customers to use.
In November, the Postal Service filed for the transfer of First-Class Mail Parcels to a competitive product and the elimination of Return Receipt for Merchandise as a special service. Those matters are still pending with the PRC. Update: the latter was approved yesterday, January 15th.
US Postmaster General Patrick Donahoe is retiring this year and in a recent speech to the National Press Club said he believes the Postal Service needs the authority and the flexibility to manage the organization more like a business. “That means streamlined governance, fewer constraints on pricing and products, workforce flexibility, and freedom from irrational mandates.”