May 6 Looks to Be the Date for New USPS Rates

There is only a “slight” chance that the pending rate case set to be implemented by the U.S. Postal Service on May 6 could be delayed, and then only by one week, according to Gene Del Polito, president of Arlington, VA-based Association for Postal Commerce.

Del Polito says he expects the Postal Rate Commission (PRC) to vote on the pending rate case in mid-March, adding that May 6 is “the most likely date for implementation.” Del Polito’s comments came during a Tuesday Webinar titled “What Every Mailer Must Know to Prepare for the USPS Rate Case,” produced by MULTICHANNEL MERCHANT.

While May 6 is the date that has been widely publicized, USPS spokesperson David Partenheimer said today that the Board of Governors would set the implementation date after the PRC votes on its recommendation. “At this point, we’re still expecting sometime in May,” Partenheimer tells MULTICHANNEL MERCHANT. “We anticipate the new rates will probably take effect in May, possibly May 6.”

H. Glen Walker, chief financial officer/executive vice president for the USPS, said last year it would cost the Postal Service about USD450 million for each month that the rate case is delayed. Last September, Postmaster General Jack Potter said that he expects the new postal rates to take effect on May 6, 2007. But, at the time, some observers questioned that date, and given the complexity of the pending rate case, a summer implementation appeared more likely.

But Del Polito says if there an implementation delay occurred, it would likely only be for a week. The rate case calls for an average increase of about 8.5%. But unlike the rate hike implemented in January 2006 — 5.4% across the board — the pending case is much more variable. The proposed increase for Standard Mail is about 9%, for instance, while package services will rise an average of 13.4%. The case also proposes new sortation levels and worksharing options.

By law, the PRC has up to 10 months to issue a recommended decision on the Postal Service’s request.

The U.S. Postal Service in January released revisions to its proposed mailing standards as part of the pending rate case. With the rate case, which it introduced in May 2006, the USPS is trying to align how much it charges for postage with the actual costs of processing the various types of mail. For that reason, a mail piece’s shape will be as critical as its weight in determining its postage.

The current price structure is based primarily on weight, but the Postal Service has determined that certain large but lightweight mail pieces actually cost more to process than some smaller, heavier pieces. Another goal of the rate case is to encourage mailers to take on more of the mail preparation tasks, such as sorting, by offering work-sharing discounts. Several of the revisions introduced in January relax the rules regarding sorting and bundling, however, most likely in hopes of encouraging more mailers to participate.