What good is 6-day delivery of the mail if sellers can't afford it? USPS Postmaster General Louis DeJoy told the mailing industry to prepare for rate increases at an uncomfortable rate - and as far as online sellers are concerned, shipping costs are already uncomfortably high.
The Postmaster General (PMG) specifically referred to market dominant products (which includes First Class Mail, Media Mail, and the cost of a stamp) during his remarks at the Postal Service Board of Governors meeting on Thursday, and he called previous price caps that had been in place for 10 years a "defective pricing model."
Historically, the Postal Service was restricted to raising market-dominant rates tied to the rate of inflation. In 2020, the Postal Regulatory Commission (PRC) changed the rules, tying price caps to what the regulatory commission identified as USPS' two biggest cost drivers: fewer pieces of mail going to more addresses; and mandatory payments the agency must make toward benefits for future retirees, according to Government Executive
But the Postal Service Reform Act of 2022 eliminated the USPS' requirement to prefund retiree health benefits, yet PMG DeJoy made clear Thursday he's determined to keep raising rates at a rapid clip. (Paradoxically, that could accelerate mail volume declines, leading to ever higher postage rates.)
The Alliance of Nonprofit Mailers and Association for Postal Commerce filed a petition with the PRC
last month, "urging the regulator to reconsider its rate system for USPS, given that Congress has passed the Postal Service Reform Act." In their filing, they said, "the problem has changed; so must the solution."
The filing was prescient when it said: "as long as the Postal Service has access to additional rate authority and maintains market power over its market dominant services, one can expect the Postal Service to use all the rate authority it has been provided."
"It falls to the Commission, as regulator, to reduce the available authority to reflect these changed conditions," they pleaded.
Bipartisan lawmakers were so concerned when passing this year's reform bill about 6-day mail delivery, they may have overlooked a bigger issue - the cost of mail for consumers and businesses.
Some reaction to the Postmaster General's remarks on Twitter:
"USPS Is Promising More Severe Price Hikes Even As Revenues Grow by Nearly $1B"
"This article says parcel volumes fell from 1.87 billion to 1.77 billion "due to the impact of recently implemented shipping rate increases, the Postal Service said." But that's not in the USPS press release. USPS would never say that."