EcommerceBytes-NewsFlash, Number 3162 - September 27, 2013     2 of 4

Sellers to Pay More for Media Mail, Parcels under USPS Plan

By Kenneth Corbin

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The U.S. Postal Service has filed its proposal for a new round of rate increases for several monopoly mailing products with its regulatory authority, asking for permission to hike the costs of First-Class letters, flats and parcels, Media mail and other products over the rate of inflation.

The headline of the Postal Service's announcement was a proposed 3 cent increase to the rate for letters sent via First Class mail, bumping the price of a stamp up from 46 cents to 49 cents.

But a number of other changes the Postal Service is seeking to implement would more directly impact the online retail community. Each is outlined in Appendix A of Postal Service's filing with the Postal Regulatory Commission.

At the bottom of the pricing schedule for First Class parcels, beginning at 1 ounce, rates would increase nearly 8 percent, jumping from $2.07 to $2.23. At the top of the scale, rates for 13 ounce parcels would rise from $3.32 to $3.93.

Single-piece flats, or large envelopes, would see a modest rate increase from $0.92 for 1 ounce to $0.94. For 13 ounce flats, the Postal Service is proposing a rate increase from $3.32 to $3.34. For international shipments in that class, the 1 ounce rates would jump from $2.05 to $2.20 for all country price groups, and, at the priciest country codes at 64 ounces, rates would rise from $31.80 to $33.70.

The Postal Service is also suggesting modest increases in the rates it charges for Media mail. The price for the first pound at the single-piece rate would increase from $2.53 to $2.58 (nearly 2%). Single-piece pricing at the top of the scale, 70 pounds, would rise from $32.32 to $33.06 (2.3%).

The proposed changes are just that - proposals, as they will have to be approved by the Postal Regulatory Commission before they can be implemented.

Gail Adams, a spokeswoman for the PRC, declined to comment on the substance of the plan, saying only that the agency is reviewing the 223-page filing and will issue its decision in due course.

"The PRC received the Postal Service's filing today and the proposals are currently being reviewed. The commission will issue its decision within 90 days of the Postal Service filing," Adams wrote in an email.

For the Postal Service, the move comes in response to a deepening financial slump that has resulted in losses in the billions quarter after quarter as mailing volumes decline while the agency remains saddled with hefty costs associated with its labor force. In fiscal 2012, the Postal Service reported a net loss of $15.9 billion. In response, the agency has been lobbying Congress to pass legislation that would provide relief from its obligation to prefund retirees' health benefits, allow it to set up its own insurance program, and grant more operating freedom to scale down to five-day weekly delivery and undertake other reforms.

In announcing the proposed rate increases, the Postal Service said that the move was an unfortunate but necessary step absent congressional action. Mickey Barnett, chairman of the USPS board of governors, held out hope that if lawmakers could enact a reform bill, the agency might abandon the above-inflation rate hikes.

"Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges," said Barnett wrote in a letter to USPS customers. "However, if these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy."

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About the author:

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.

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