Standard Mail Prices for Parcels to Increase 23%? By Jerry Hempstead
On July 6, the United States Postal Service announced its proposed prices for Mailing Services products, which include First-Class Mail parcels, Standard Mail Parcels and Non Flat Machineable , Bound Printed Matter, & Media Mail. information is available from USPS at: www.usps.com/communications/newsroom/deliveringfuture/prices.htm
For the Readers of Parcel Magazine, there is a 23.3% average increase proposed for Standard Parcels & Non Flat Machineable Pieces. The USPS filed the proposed prices with the PRC, which by law has 90 days (until October 4) to review them and issue a final decision on whether "extraordinary and exceptional circumstances" exist to justify this effort, and whether the prices requested are in fact "reasonable and equitable and necessary." The New Rates will go into effect January 3, 2011, if the PRC approves the increase.
The rules of engagement for postal rate increases changed with the Postal Accountability and Enhancement Act (PAEA) enacted on December 20, 2006. Prior to that, increases were "litigated", meaning the USPS would go to the PRC with its costs, its model for the future of costs, its current volumes and the predictions of volumes and then model the cost of each class of mail and propose rates that would cover the attributable cost for handling that class of mail. There was give and take, and challenges of the model and to volume projections, and various impacted entities could testify for or against.
With the PAEA, the new process was to break competitive (Pieces over a pound that compete with FedEx and UPS) from the Monopoly (market dominant) products and to allow the USPS to increase those monopoly product rates once a year by not more than the Consumer Price Index (CPI). Well, for some odd reason, this change that the USPS had lobbied so hard to get and was to cure its financial future didn't work, and now they are claiming an "emergency" and a significant increase beyond what the CPI would call for.
The first order of business for the Regulatory Commission is to determine if an emergency exists at all. Just recently, the USPS Office of the Inspector General declared that the USPS had overpaid into the retirement fund $75 Billion. The regulatory Commission, wanting to validate that claim, hired their own accountants and they came up with an overpayment of $50 Billion. If Congress accepts either of these findings, then perhaps no emergency exists and the USPS is swimming in cash for a while.
For now, the Regulators have to act on the budget the USPS is forced to live within, and to accept the reality of the falling volumes, and the fact that on paper the USPS is losing billions of dollars. If things continue as they are now, the USPS will continue to lose billions until the USPS is out of money.
Congress and the PRC will not let that happen.
I'm including information provided by the USPS on the rate proposal. You, as concerned readers, can participate in the rate making process through The Parcel Shippers Association if you feel the 23.3% increase is not justified. (www.parcelshippers.org)
Comments:
Thursday, July 08, 2010 1:13:06 PM by Anonymous
If I'm not mistaken, the overpayment into the retirment fund cannot sit in the USPS coffers because the USPS is not allowed to show profit...that $ will go into the Fed Reserve to be used as the Fed Govt appropriates that revenue....
Thursday, July 08, 2010 2:32:33 PM by Anonymous
No, this is the lowest cost shipping method via any carrier. Why is this outrageous? UPS, FedEx and the other consolidators drove the USPS to this by flooding the USPS system with these cheap packages, now they've got to pay their fair share.
Thursday, July 08, 2010 2:37:06 PM by Anonymous
In most businesses they lower their prices to increase sales and have higher revenue. why doesn't the USPS try that approach and see if it works. I believe if they lower their rates they would have increased business. they already have their fixed costs in place,so why not take a few more pieces with them.what a monopoly they have and we are stuck with it.if we ran our businesses the same way, we wouldn't have a business.
The USPS does not have a monopoly, and by the way, If the USPS operated the way private enterprises do we'd all be paying a few dollars for every piece of mail we send.
As a firm who mails and ships on behalf of hundreds of small business clients using all the major carriers, we'd like to remind everyone the United States Postal Service is quite simply the best mailing and shipping value in America.
Complaints about the USPS baffle us. Ever try to get UPS to correct a mis-delivery? Ever try to get UPS to deliver a "special" parcel outside of your negotiated terms? Ever had FedEx deliver a sensitive document "no signature required?
The United States Postal Service is quite simply the best mailing and shipping value in America. Why not join your local Postal Customer Council and discover how little you actually know about the services and value provided by our Postal Service?
Thursday, July 08, 2010 5:38:21 PM by Anonymous
Interesting comment from "mailing/shipping pro". the USPS "quite simply the best"? Ever try to track a package prior to it being delivered? Ever try to get the USPS to pay on a claim? ever try to get the USPS to redirect a package to another address?
I don't understand the statement regarding UPS delivering a "special" parcel outside your negotiated terms? The only negotiated terms are rates, not services. UPS offers more delivery options than either of the other two.
Friday, July 09, 2010 11:33:53 AM by Anonymous
I don't understand the logic. How can USPS lower prices and still expect to make a profit? The common misunderstanding is that the USPS already has a built in margin, but in reality they never have. They have no flexibilty in their pricing to accomadate a profit. So teh prices go up when they need money. For crying out loud, you skated by last year with no price changes in mailings services, including std parcels. Get over it.
Monday, July 12, 2010 12:54:10 PM by Anonymous
interesting comments,our company uses all services the USPS has. more in the way of bulk mail.we have lost millions of pieces of mail because of rate increases as I'm sure others have. we have also had to buy additional equipment just to satisfy their changes.you say they don't have a monopoly, where else can we mail bulk mail.I also belong to the local P.C.C.not impressed.they are very top heavy. we see them create new jobs just to keep certain employees.it's just very irratating that the customer always has to do the changing over their mismanagement.
Monday, July 12, 2010 2:59:10 PM by Anonymous
Here's what is happening: USPS experiences lower mail volumes...lower mail volumes result in lower revenue...lower revenue results in operating losses...operating losses result in increased prices....increased prices result in lower mail volumes...and on it goes. It's a downward death spiral.
Everytime the USPS raises prices, traditional mail delivery flees to electronic mail delivery. That's an undisputable fact.
The average delivered pieces per mailbox is down to 4 per day whereby it used to be 10. Since a significant part the costs associated with moving and delivering mail are fixed, it essentially cost the USPS the same to deliver 4 pieces as it did 10. Seems like it would make sense to strategically lower the price on pre-sort standard and pre-sort first-class mail to stimulate volume.
Don't think that works? Look how hotels, airlines, rental car companies strategically lower prices through Priceline, Hotwire, Expedia, etc. to stimulate sales volume. Name ONE other business (non-monopoly) that increases prices in the face of decreased volume/revenue. It's basic economics (supply & demand).
The USPS is the most "un-customer friendly" organization I've ever dealt with. Every day, we sell their service (mail delivery) bundled with ours (printing & mailing)...yet they treat us like an advesary - not a business partner.
Wednesday, July 14, 2010 6:35:12 PM by Anonymous
Has anyone ever considered that we shold have a "Do Not Mail" listing just as we are able to suscribe to a "Do Not Call" listing. My mailbox is full of Advertising mail> It goes directly from my mailbox on the street into the trash can in my gargae. Millions of trees are killed and who knows what chemicals are used to make ink and all of that paper ends up at the land fill. Its wastful and bad for the environment. 90% of the stuff that gets placed in my mailbox could stop. How can we claim to care about the environment and allow this to continue. I would gladly give my e mail address to advertizers in exchange for the right to turn off the paper so that they can "sell" to me. if they have a coupon they want to send then I can decide if I want to print it and use it to buy their product. If we turn off the ad mail then the USPS could really re-engineer their service and then we could just pay for those services we need and want. Now the whole economy is paying to print, mail, deliver, dispose of all this paper.
Friday, July 16, 2010 1:52:35 AM by Anonymous
Go to the DMA.org and sign up for their mail preference service. You can stop junk mail that way.
Tuesday, August 24, 2010 2:16:50 PM by Joe Ralstin
The USPS is still the lowest cost option for under-a-pound parcels. The 23% (Fulfillment parcel) increase is to cover the high cost of hand processing these parcels.
The other vendors start at one pound and add additional charges for residential and extended zips. Go ahead and check for yourself.
The USPS works in a very restrictive environment. They can not (by law) make a profit, close under performing facilities (politics), renegotiate labor costs (union), or quickly react to the market (congress approval required). They must deliver to every address in the US (currently) six days a week.
They are at least trying to split the under-a-pound parcels into 2 categories Fulfillment and Marketing to appease the advertising industry. The new Marketing parcel rates are no where near a 23% increase so the direct marketing industry is not getting hit with the 23% increase. The 23% increase is on the packages (products) that directly compete with UPS and FedEx.
The USPS does two things very well, sort letters and flats and deliver the final mile. Everything outside of these to parts of the process are inefficient and expensive (union labor and contract trucking) and if you think that privatizing the USPS is the answer, you would reconsider once letter rates would go to $1 to $2 per item for densely populated areas and much higher in the "not-so-profitable" parts of the country.
And how many of the other vendors give discounts on the package based on its content like Bound Printed Matter, Media, or Library mail?
If you haven't looked yet, download the new rates from the USPS website and spend some time looking at them.
