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Preparing for the First USPS Rate Change of 2015

Posted by Mark Fallon on Jan 20, 2015 5:30:00 AM

Last week, the U.S. Postal Service (“USPS”) announced the first rate change for 2015. The rate adjustment was filed just days after the Postal Regulatory Commission (“PRC”) published a notice outlining the steps the USPS needed to follow when removing the exigent surcharge they approved in December of 2013.

In August, we published a blog post recommending that mailers budget for a 2% postage rate increase in 2015. A few months later, the USPS announced they wouldn’t file for a January increase and many mailers reduced their 2015 postage budgets accordingly. Those mailers will be facing budget shortfalls as the new rate case brings a 1.9% to 2.7% increase for commercial First Class mailers and an average 1.9% increase for Standard Class mailers beginning April 26, 2015.

2015 USPS Rate Increase
Many of the pricing tables in the rate case can cause confusion. The figures in the rate case are based on what mailers would be paying without the exigent rate increase. As such, the tables include pricing that is actually lower than the current rates. For example, here’s the First Class Mail breakout:

2015_Price_Increase_First_Class
Current stamped single piece mail is priced at $0.49 and AADC Automation mail costs $0.406, not $0.47 and $0.389 as shown in the charts. This difference makes it more difficult for mailers to accurately assess the impact of the increase on their budgets. We recommend ignoring the prices and using the percent changes for each category of mail that your company produces. Here’s the chart for Standard Mail:

2015_Price_Increase_Standard_Mail
While better charts will be forthcoming (we hope), mailers need to act now to prepare for the April rate increase. Here are 5 steps every mail operations manager can take now:

  1. Read the entire rate case to determine what other changes will impact your budget. On the PRC website, scroll down to: R2015-4, Notice of Market-Dominant Price Adjustment. Follow the links to “Documents” and select the top PDF. The rate case also includes new Flat Sequencing System price structure and bundle schemes.
  2. Project your budget shortfall by using the percentage increases noted in the rate case. While rates may decrease in August or September when the exigent rates expire, we recommend that you plan for an 8-month adjustment. The USPS may win the lawsuit against the PRC, and in that scenario, the rates will remain permanent.
  3. Inform your management and your staff as soon as possible. As Colin Powell once said, “Bad news isn't wine. It doesn't improve with age.” The more information that people have, the better decisions they can make.
  4. Take a close look at the four promotions being offered by the USPS this year. While the promotions are only in place for short timeframes, the savings can help offset the rate increases. The promotions include:

     - Earned Value Reply Mail Promotion (May – July 2015)
     - Advanced and Emerging Technology Promotion (May – October 2015)
     - Color Transpromo Promotion (June – November 2015)
     - Mail Drives Mobile Engagement Promotion (July – December 2015)
  5. Stay informed! There will be more information published in the coming weeks and months. Reach out to your local Postal Customer Council and subscribe to email updates from the USPS, including the Domestic Mail Manual Advisory and the PCC Insider bulletins. Also, we’ll publish updates and analysis on this blog as more information becomes available.

 

 

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