USPS supports proposed terminal dues structure

The United States Postal Service (USPS) has said that it supports the proposed amendments to the terminal dues structure that are scheduled to be considered at the upcoming 26th Universal Postal Union (UPU) Congress. In a filing submitted to the US Postal Regulatory Commission (PRC) on Thursday (21 July), the USPS said: “In the Commission’s [the PRC] most recent Annual Compliance Determination Report, the Commission acknowledged that the Postal Service had lost $74.8m in FY 2014 (with cost coverage of only 70%) and had lost $97.9m in FY 2015 (with cost  coverage of under 72%) from the Inbound Letter Post product for which foreign  postal operators pay terminal dues.”

The USPC continued: “The UPU proposals would create a new structure for terminal dues based on shape that would address these  imbalances and would be expected to reverse this trend of Postal Service losses.

“Indeed, the new structure breaks apart the calculation of terminal dues for letters (category “P”) and flats (category “G”) from the calculation of terminal dues for packets  (category “E”), better aligning the rate methodologies with the separate categories.

“The new terminal dues structure will more closely relate the costs of processing  and delivering to corresponding shapes of mail pieces, applying a different formula to calculate rates for packets than for letters and flats.  With the realignment, the Postal Service expects dramatic improvement in revenues from this product during the CY 2018-2021 period. In particular, the same packets category that has been a source of criticism in terms of alleged market distortion will become instead a key driver in increased revenue to the Postal Service from terminal dues and should, in turn, lead to full cost coverage.”