The Postal Rate Commission this morning recommended that the U.S. Postal Service raise its rates an average of 7.7%. The increase is 1% less than what the USPS requested when it filed its proposal with the PRC last Sept. 11.
The new rates, expected to be authorized by the Board of Governors next month in Washington, could go into effect as early as June 30. It is believed they will generate some $4 billion in additional revenue for the cash-strapped USPS.
The Direct Marketing Association supported for the PRC recommendation.
“While we are never pleased when rates increase, we are gratified that the mailing community, the Postal Service, and the Postal Rate Commission could work together to reach this agreement,” said DMA president H. Robert Wientzen, in a statement.
“It is also my hope that this round of increases will buy us time to achieve needed legislative reforms,” said Wientzen.
He continued, “A permanent fix to the Postal Service’s problems through legislative reform is still critical to the long-term viability of the Postal Service. Otherwise, continual price increases will lead to continual declines in mail volume and the Postal Service will likely price itself out of business.”
“It is our hope that today’s decision will help to provide some financial stability to the Postal Service and that future increases, which would impede economic recovery, can be avoided for as long as possible,” said Wientzen.
Added Bob McLean, executive director of the Mailers Council, “the increase was inevitable but regrettable because now volume is going to go down and that will further hurt the Postal Service’s finances.”
“But maybe this will wake Congress up to the need for fundamental reform for the USPS,” he added.
He also said current USPS cost-cutting plans were insufficient to reduce its debts and the postal service had to consider further job cuts to really have an effect on its financial health.
Fort his part, Neal Denton, executive director of the Alliance of Nonprofit mailers pointed out that even if these rates are implemented, the could face as much as a $3 billion deficit in the current fiscal year.
Although the USPS lost $1.6 billion last year, postal officials anticipate this year’s loss will be cut to $1.35 billion.
While most rates will go up 7.7%, Standard Mail will increase 7.8% and nonprofit mail rates will rise 6.6%. The USPS originally requested a 7.3% hike for Standard Mail.
Catalogers, mass mailers and other direct marketers that presort mailings by carrier route will see a 6.2% increase. However, nonprofits in this category face a 6.5% hike.
The price of a first class stamp will go up 3 cents to 37 cents and the postcard rate will increase 2 cents to 23 cents. The PRC also recommended a 13.5% rate increase for Priority Mail; a 9.4% boost for Express Mail; a rise of 6.4% for Parcel Post; and a 14.5% hike in post office box rental charges.
The PRC based its recommendations on an agreement reached between rate case participants and postal officials earlier this year, according to chairman George Omas, who praised their actions. “This selfless attitude is a credit to the entire mailing industry,” he said.
Describing this rate case as “unique” because of that settlement agreement, Omas said the PRC’s proposals are “intended to meet the needs of the postal service as identified prior to the terrorist and anthrax attacks of last fall,” which cost the USPS an estimated $5 billion.
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