USPS to hike shipping rates, letter prices to rise 2.6%

The US Postal Service is to increase its mailing and shipping rates by an average of 4% from 27th January, 2013, subject to regulatory approval. The struggling USPS filed with the Postal Regulatory Commission yesterday seeking an average 2.6% increase in letter and direct mail rates, the maximum allowed by US postal law.

But its shipping products that are outside the annual price cap will see more significant price rises, particularly for retail and international customers.

A 9% increase is planned for Priority Mail retail rates, and a 21% increase for Parcel Post now it has become a competitive product, while international shippers are in line for double-digit rate increases, including a 59% increase for First Class Package International.

First Class Mail prices for 1oz letters will rise by one cent (or 2.2%) to 46c, but additional ounces will continue to be charged at 20c. Postcard rates will increase by one cent (or 3.1%) to 33c.

USPS is also launching some new product lines from January, and during the year will be running six promotional events offering discounts to encourage certain uses of the mail.

New products will include a “forever” stamp for global mail, allowing customers to send a letter anywhere in the world for a flat $1.10 price, with stamps that never expire and an be used even if prices rise in future.

For its competitive shipping products, USPS is promising a number of new features from January including free tracking for all competitive package shipping services and a signature-on-delivery option for Critical Mail letters and flats.

And, a new return service will be available to high-volume parcel shippers (those shipping more than 50,000 items a year), called Parcel Return Service.

Shipping products

USPS said the changes to competitive shipping prices would allow them to cover their attributable costs, to comply with US postal regulations.

Some hefty price rises have been proposed for some products that have recently moved from being monopoly services to competitive.

Overall express mail prices will rise 5.8%, with retail express mail prices increasing 6.5%. Retail Flat Rate Envelopes and Legal Flat Rate Envelopes, which represent a significant portion of express mail volumes, will see rates rising 5.3% to $19.95.

Commercial customers will see their express mail rates rise only 2% for Commercial Base rates and 1% for Commercial Plus.

Priority Mail prices will rise 6.3% on average, with retail prices rising 9%. USPS said a third of the retail rate rise was to pay for “free” tracking visibility for the service.

Commercial Base and Commercial Plus price increases for Priority Mail will be 3.7% and 3.8% respectively.

Other rate rises on the competitive side of the USPS portfolio include a 9% average price rise for Parcel Select, the bulk ground shipping product, a 4.8% increase for the Parcel Return Service and a 3% increase for the First-Class Package Service.

Standard Post – the new name for Parcel Post now it has become a competitive product – will see rates rise 21% so that it covers its costs, and is not subsidised by USPS monopoly services, which would be against postal laws for competitive products.

International product rate increases will include a 9.6% rise for Global Express Guaranteed services on average, and a 13.2% rise for Express Mail International services.

Priority Mail International will see prices rising 15.1% overall, while First Class Package International will have rates hiked 58.6% to cover its costs now it is a competitive product.

Monopoly Products

Meanwhile, USPS has kept its monopoly service prices to a 2.6% average price rise, to remain within the legal price cap for its market-dominant portfolio, based on the current rate of inflation.

Price increases for First Class Mail and Standard Mail will average 2.57%, while for Periodicals it will be 2.56% and for Package Services 2.569% if the Postal Regulatory Commission approves.

Special Services will have rates increased by 2.85%.

The Postal Service is taking the full increase in monopoly rates available to it under its CPI-based annual price cap, as its losses for the current financial year have passed the $14bn mark, including healthcare payments obligated by Congress that USPS is refusing to pay.

Promotions

USPS is also seeking permission to run six promotional events during the next financial year as part of its efforts to boost mail volumes.

This will include another promotion to highlight the linking of physical mail to mobile phone technology in direct marketing campaigns – called Mobile Coupon/Click-to-Call – to be held March-April 2013.

From April to June 2013 mailers will be encouraged to use First Class Mail as a customer response channel through the Earned Value Reply Mail Promotion.

In August and September 2013 three promotions will look to encourage use of emerging mail technologies like near-field communication, augmented reality and authentication, as well as picture permit indicia and the sending of product samples.

Finally in November and December 2013 USPS is planning another campaign promoting the use of mail to encourage festive season shopping.