USPS files price rise request

USPS has filed proposed price changes with the Postal Regulatory Commission (PRC) – including raising the cost of a First-Class Stamp to 46 cents. First-Class Mail postcard prices would increase 2 cents to 30 cents, whilst periodicals would receive an 8% increase. USPS has recommended an increase of 5.1% for catalogs, and Standard Mail parcels would increase about 23%.

If approved as proposed, the new prices would take effect in January 2011 – almost two years since the Postal Service last raised rates.

The proposed price changes would generate $2.3bn for the last three quarters of the 2011 Fiscal Year (January to September) and an estimated $3bn for the full 12 months of Fiscal Year 2012.

Despite eliminating millions of work hours and reducing expenses by more than $1bn every year since 2001, a budget gap remains. The proposed price increases will help close a $7bn projected shortfall in FY 2011. The Postal Service would have needed to raise rates an average of 20% across all product lines to completely close that expected gap.

“This proposal is moderate and reasonable and carefully evaluated for its effect on our customers,” said Maura Robinson, vice president, Pricing. “Increasing prices will help overcome some of the financial challenges faced by the Postal Service. We will continue to work with Congress and other stakeholders to implement long-term solutions.”

Postmaster general John E. Potter identified in March a number of actions the Postal Service will pursue, including a change to delivery frequency, expanded access to products and services more convenient to customers and restructuring prepayment of retiree health benefits. Potter was clear at the time that customers would not be asked to close the entire budget gap.

“Future price increases can be greatly alleviated if the Postal Service is given the tools necessary to be a more flexible, market-oriented company,” Robinson said.

The PRC has 90 days to review and make a final ruling on the filing (on or about 4 October). The PRC can accept or reject all price requests.

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