USPS proposes $900m rate increase for monopoly products

USPS proposes $900m rate increase for monopoly products

The US Postal Service is seeking regulatory approval for a near-2% increase in its prices for monopoly services for business customers. The Postal Service told customers yesterday that the 1.966% rate increase, restricted by its annual price cap to the rate of inflation, would bring in about $900m in additional revenue including $400m in the 2015 financial year. The federal agency generated $67.8bn total revenue in 2014.

The rate rise does include the surcharge USPS has been applying to counter the financial impacts of the 2008-09 recession on its services, as permitted by the Postal Regulatory Commission.

Rate changes among the five major service classes include a 1.949% increase for First-Class Mail, 1.886% increase for Standard Mail, 1.965% increase for Periodicals, 1.964% increase for Package Services and 0.234% increase for Special Services.

If the regulator approves the price increase, it is scheduled to take effect from 26th April.

The Postal Service said it will be running various industry webinars to provide more detail about the proposed price changes.

USPS said it will be leaving the price of its single-piece one-ounce stamped First Class Mail letter at 47, and its Forever Stamps at 49 cents. But, additional ounces for letters will rise by a cent to 22c, with letters to all international destinations rising by 5c (4.3%) to $1.20, and postcard rates rising by a cent to 35c.

Metered single-piece letters will see prices rise by half a cent (1.1%) to 46.5c.

“Financial stability”

“Today’s action is the latest in a series of steps the Postal Service has taken as part of a comprehensive approach to achieve financial stability,” the Postal Service said.

“By growing volume, revenue and contribution, the Postal Service will continue to meet America’s mailing and shipping needs well into the future. While improving efficiency in streamlining its network and seeking legislative changes, the Postal Service must address an outdated business model.”

Commenting on its proposed price increases, the Postal Service said it was attempting to address some of the concerns about loss-making products. It is also seeking to simplify Special Services — services like address correction — to improve ease of use.

While filing price increase proposals, the Postal Service also issued details on four mail promotions planned to run in 2015. Plans include a promotion from May to July encouraging businesses to sent Business Reply Mail envelopes out within their letters using First-Class Mail.

A promotion running from May to October will encourage advertisers to design direct mail so that it connects with mobile communications technology, or uses other new technology to engage consumers.

The Postal Service is also running a promotion from June to November encouraging use of colour advertising within bills and statements (transpromo), and a promotion from July to December encouraging mail pieces that allow consumers to buy products through their mobile phones.

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