Postal Pieces: 2018 Price Changes Announced

No Promotions for Now

On October 6, 2017, the Postal Service filed its Notice of Postal Rate Adjustments for Market Dominant and Competitive Products, to be effective January 21, 2018. As previously explained to mailers and industry stakeholders in earlier meetings and announcements, the annual promotions that the Postal Service has included with price changes were not included in the price filing.

For free papers that distribute their papers by locally-entered, drop-shipped saturation mail, the rate adjustments were below the average price change of approximately 1.9% for market dominant products. Recognizing the price sensitivity of these products and their contribution to Postal Service revenues as a product that is largely drop entered, is subject to many competitive alternatives, and has historically made a significant contribution or "mark up" to Postal Service institutional costs, the overall "average" increase for high density and saturation flats was 1.1%. A chart showing the proposed rates for high density and saturation mail, and before and after price increases, accompanies this article.

Other changes in Postal Service products included a one cent increase in the first-class retail, or "forever" stamp, taking that price from 49 cents to 50 cents. There was no increase for additional ounces of first class mail, keeping that rate at 21 cents per ounce. The retail price for postcards increased from 34 to 35 cents. For competitive products, and shipping services including priority mail, the average increases were higher, averaging a 3.9% price increase.

In the Notice that accompanied the filing, the Postal Service announced that the filing was intended, as much as possible, to strictly comply with the current rate-making law and the authority that the Postal Service had received from the last independent Board of Governors Member remaining in office, to file a standard, CPI, price adjustment case. The Postal Service included with the price filing a Resolution that had been approved as of last November, 2016, when the last independent Board Member of the Postal Board of Governors had a term that came to an end.

As of that date, the Board of Governors apparently were concerned that the future Board of Governors would not have a new appointment, and the only Board Members remaining would be the "staff level" Board Members, including the Postmaster General and the Deputy Postmaster General. Under the law, changes in prices and products are to be approved by the Postal Board of Governors, including at least one independent Board Member, in addition to the Postal Service staff of the PMG and Deputy PMG.

The Board Resolution gave the Postal Service limited authority to file a case that strictly complied with the increases allowed by the cumulative CPI, and authority for the Postal Service to make some adjustments in prices relating to work share discounts and products that were not covering costs, to comply with previous rulings and concerns of the Postal Regulatory Commission. Since that Resolution was passed, an entire year has gone by with no current nominees pending for consideration to fill the seats for independent Postal Board of Governors Members leaving the USPS without the authority under the statute to make changes in prices, classifications and products.

It is this lack of an independent Board of Governors that has caused the Postal Service to announce that it cannot file, or continue, the Postal Service promotions that have been included in postal rate filings and adjustments for the past several years. The Service had previously discussed postal promotions with the industry, and previewed promotions to be included in the 2018 price filing.

It has been generally rumored and discussed that the absence of any independent Board of Governors Members, and the potential risk that any price filing might be challenged if promotions were included, led the Postal Service to take the very conservative approach of taking promotions off the table and filing a price adjustment that made no structural, classification, or product changes, and keeping the overall price adjustments strictly within the limits of the CPI cap and in accordance with previous PRC rulings.

For free papers distributing by saturation mail, some highlights of the rate filing include:

• The USPS did not change the current breakpoint of 4 ounces.

• The "average" rate for mail drop shipped at the DDU, whether entered in the simplified (EDDM address format) or with an address, increased modestly by less than 1%.

• There was no change in the pound rate. In general, the rates for heavier mail, charged at the combination piece and pound rate, did not increase. With the exception of the increase reflected in the piece rate, the pound rate charged for pieces weighing over 4 ounces remained the same.

• The Detached Address Label surcharge increased from 3.5 cents to 3.6 cents.

In its Notice of the Price Adjustment, the Postal Service expressed optimism that the 10-year rate review will conclude with a decision in favor of the Postal Service's efforts to break free of the current price cap requirement. The Service begrudgingly announced that it was filing this case to comply with current law, but was outspoken in stating that, "The Postal Service maintains that the rate-making system must change to meet the mandatory statutory objectives, including assuring the Postal Service's financial stability and providing funds needed for investment in efficiency, service quality, and mail security. . . Indeed, this is likely the last market dominant price adjustment case that will be reviewed under the current system."

The 10-year rate review has, as of the writing of this article, not concluded. Although the PRC had signaled its goal of completing the review by "early fall", it now appears that a final decision may not be available until November.

Downloads

Postal Rate Chart


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