On Thursday, October 11, 2018, the U.S. Postal Service (USPS) filed the rate case for Market Dominant products with the Postal Regulatory Commission (PRC). Set to go into effect on January 27, 2019, the new rates represent about a 2.5% overall increase over the current prices for mailing, or “Market Dominant” products.
Despite the headlines appearing on news websites, this isn’t “the biggest rate increase”. For many mailers the increase is lower than expected. While retail customers may have “sticker shock” on the 10% increase on stamps, the nickel increase allows the USPS to achieve the “simplicity of structure” of pricing. Plus, second ounce rates go down, flats pricing stays flat, as do postcards.
For Commercial First-Class Mail, the largest increases are with single-piece letters. Metered, Single-Piece rates are set $0.03 below stamped pieces, so that’s a big hike in that category. The lower increases for presorted mail will be a selling point for service bureaus in the coming months. In good news for most commercial mailers, the USPS is retaining the $0.003 per piece discount for using the Full-Service Intelligent Mail Barcode (IMb).
There’s mixed news for USPS Marketing Mail. The average increase is around 2.5%, with higher increases in High Density/Saturation Letters (3.8%) and High Density/Saturation Flats and Parcels (3.6%).
Along with the rate increases are the reinstatement of promotions for First-Class Mail and Marketing Mail. The proposed promotions include:
- Emerging & Advanced Technology
- Earned Value Reply Mail
- Personalized Color Transpromo
- Tactile, Sensory and Interactive Engagement
- Mobile Shopping
- Informed Delivery (NEW)
It’s also worth noting that even with the increase, USPS rates remain significantly lower than most foreign posts. Here are the prices for a First-Class letter, in US Dollars (exchange rates on 10/15/18):
- US $0.55
- Japan $0.73
- Canada $0.77
- Germany $0.81
- Great Britain $0.88
- Australia $1.07
- France $1.10
It’s important to note that this increase was tied to the rate of inflation as required by the structure established by the Postage Accountability and Enhancement Act (PAEA) of 2006. The proposed ratemaking rules from the PRC that were published last December would allow the USPS an additional 2% above CPI to increase rates. The final rule hasn’t been published – yet.
If the new rules are adopted, the USPS will probably take advantage of the opportunity to improve their financial situation, especially with proposals to privatize the organization. Mailers should expect another increase in 2019.