US Postal Service proposes new approach to shape more efficient future
The U.S. Postal Service has unveiled proposed new pricing incentives that would effectively reshape the future of mail and provide benefits to both business customers and the Postal Service. The current pricing structure for postal products relies primarily on a weight based system. The new plan – sent to the Postal Rate Commission (PRC) as part of a 2007 price adjustment proposal package – combines weight with shape to allow the Postal Service to better align prices with processing costs to ensure every type of mail covers its costs. Price changes would not occur before May, 2007.
Current Postal Service prices do not distinguish between some letters, flats, and parcels. For example, in First-Class Mail, the current single-piece price is 63 cents to mail a 2-ounce letter, a 2-ounce flat, and a 2-ounce parcel. The new plan recognizes that each of these shapes has substantially different processing costs and should have different prices.
The new pricing plan, in effect, creates an adjustable rate system by giving mailers the opportunity to obtain lower rates as they find ways to configure their mail into shapes that reduce processing costs for the Postal Service. For example, if the contents of a First-Class flat can be folded and placed in a letter-sized envelope, the mailer can reduce the postage by as much as 20 cents per piece. If a First-Class parcel can be configured as a flat, the mailer will save 36 cents.
As the Postal Service emphasizes shape in its pricing, it also proposes to reduce the additional ounce rate. As mail pieces become heavier, the proposed price increase declines. For letters over one ounce, the new prices are actually lower than today’s prices.
“Our pricing proposal recognizes changes in underlying costs and market conditions, and includes pricing initiatives to improve efficiency, which helps keep rates affordable for everyone,” said Postmaster General John E. Potter. “We will work closely with our business mailers in the coming months to show them how they can take advantage of the new pricing to keep their mailing costs as low as possible,” added Potter.
