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USPS Predicts Profits a Day after Announcing July 2022 Rate Hike

USPS
USPS Predicts Profits a Day after Announcing July 2022 Rate Hike

A day after announcing higher costs for mailers beginning in July, the USPS said it should be able to reach “record net profit” beginning in 2024. The Postal Service said that since March of 2021, it had taken a more “rational” pricing approach, and said use of new pricing authorities and approach had already generated an annualized revenue increase of $1.9 billion.

The news came in a progress report on the Postal Service’s Delivering for America 10-year plan that it launched last year.

According to the report, “Despite recent inflationary impacts to our financial projections, the combined effects of our progress with pricing policies, network transformation, growth initiatives, and enactment of Postal Service Reform legislation reinforce that the organization should be able to record net profit beginning in the year 2024 and to sustain this financial performance through 2030.”

The USPS said it had taken “judicious” advantage of its new pricing authority for market dominant services that the Postal Regulatory Commission granted it, saying it followed 16 years of pricing policies misaligned with organizational needs.

But not everyone agrees the USPS has been judicious. The Alliance of Nonprofit Mailers tweeted of yesterday’s news of a rate hike for market dominant services, “Price increases on the order of 16% to 20% over 18 months are not “affordable.””

Government Executive cited some industry criticism and noted that the USPS had the authority to raise its First-Class mail rates by 6.507%, but chose to raise them by 6.506% – not exactly a showcase of restraint.

The publication also noted that the rate hike announcement came the same day President Biden signed into law a bipartisan bill to erase much of the agency’s debts and allow it to pursue new lines of revenue.

It also came just 3 days after the USPS instituted steep new surcharge fees impacting some shippers.

Today’s Delivering for America progress report also cited its new USPS Connect service, and it said it had begun strengthening the delivery operations network:

“While we have made progress in designing a best-in-class processing and delivery operations network connected by a fully optimized surface and air transportation network, we have not finalized our plans nor begun to implement the significant changes needed across our enterprise. These efforts – impacting all aspects of our operations and infrastructure – are being refined now and will be deployed in stages this year and in the coming years.”

The report also said the USPS has been investing in postal infrastructure. “Nearly $6.3 billion has been committed from a $40 billion+ commitment to invest in core postal infrastructure over the course of the coming decade — covering delivery vehicles, technology, retail locations, processing equipment, facility buildings and delivery operations. The Postal Service recently ordered an initial 50,000 Next Generation Delivery Vehicles for $3 billion, including 10,019 battery electric vehicles.”

On page 4 of the report, the USPS includes a section on “Financial Targets and Projections.”

Postmaster General Louis DeJoy said the organization had made significant progress in the first year of the 10-year plan, but said the work is far from over. “Delivering for America is helping to drive a new sense of purpose and focus across all levels in the organization,” he said.

The USPS has yet to announce new July rates for “competitive” services including Priority Mail and First Class Package Service (FCPS).

You can find the press announcement on the USPS website, which links to the new report.

Ina Steiner on EmailIna Steiner on LinkedinIna Steiner on Twitter
Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.

5 thoughts on “USPS Predicts Profits a Day after Announcing July 2022 Rate Hike”

  1. Have these genii factored in the millions upon millions they will lose to Fedex and UPS because of their asinine $15 surcharge on cartons over 30″?

  2. I hope their not including long packages in the net profits thru 2024, I’m one seller and just pulled $25k postage per year in fishing rods, image the tens of thousands including golf club sellers. I’ve said it several times, each rate increase is a decrease in sales. With all the fees, shipping, taxes and increase shipping supply increases are killing small businesses.

  3. FYI : It costs over $100 to ship via USPS a 5 LB 20 X 20 X 12 box to Idaho.
    If they aren’t making a HUGE profit now…..
    So, they learned how to hobble America.

  4. I have been getting several phone calls from the USPS rep lately to solicit me for my shipping. I never got these phone calls in 19 years of online selling. I asked why it is taking over a month to have parcel select packages delivered, loosing me money because I have to give refunds ? ? ? She said she could not help with that and to call another number about that.. I said I thought you could give me an answer on this problem with parcel seledt taking over a month for delivery. She said no I am here to help you with your shipping.. I told her I was going to now use FED EX and I hung up on her. FED ex and UPS has been courting my business for years. Last year I spent over 58k on shipping. My USPS carrier hates her job….. Let that sink in!

  5. And this is what sellers do not understand….USPS is for smaller Priority mail parcels so it’s designing it’s business model for just that. This isn’t just my opinion, this is info from my local USPS. USPS says they do not have the facilities nor the truck space for larger parcels. Just look at the size of USPS trucks which are much smaller than FedEx and UPS trucks. USPS will further increase fees on larger packages, by design, because larger parcels take too much space for the typical post office and delivery trucks.

    And those who are paying for just First-Class mail vs. Priority mail. USPS cannot afford to care if your packages becomes lost because you haven’t paid for insurance.

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