Nonprofit postal rates set to skyrocket
The United States Postal Service (USPS) filed a notice with the Postal Regulatory Commission (PRC) under the guise of a statutory holiday weekend on Friday, asking for rate increases of 6.9% on average, with different categories ranging from 5.7% to 14.6%. The new rates would take effect on August 29.
According to the Alliance of Nonprofit Mailers (ANM), Nonprofit Marketing Mail (NMM) revenue per article will be 60% of commercial revenue as close as possible, as required by the law. The overall average increase for nonprofit marketing mail would be 7.8%, with increases within categories ranging from 5.7% to over 14%:
Letters: + 5.7%
Apartments: + 10.4%
Parcel : + 8.6%
Letters HD / Sat / CR: + 10.1%
HD / Sat apartments: + 14.6%
Letters CR, apartments and parcels: + 13.9%
First-class mail prices would increase 6.8% to offset lower revenues. Mail volume over the past decade has declined 28%, or about 46 billion items, and continues to decline, including a 32% drop in first-class mail volume and a 47% drop in volume unit first class mail.
Postal rates rose on average by almost 2% in January. This latest rate hike is part of “Delivering for America,” the USPS 10-year plan to achieve financial sustainability and service excellence released in March.
“Over the past 14 years, the postal service has had limited pricing power to respond to changing market realities,” Postmaster General and CEO Louis DeJoy said in a statement. “As part of our 10-year plan to ensure financial viability and service excellence, the Postal Service and the Board of Governors are committed to judiciously implementing a rational pricing approach that allows us to remain viable and competitive. and to deliver reliable postal services that are among the most affordable in the world, ”he said.
“As much as we have anticipated full use of the new tariff authority, it is shocking to see a government monopoly harming captive shippers in the name of its profitability,” said Stephen Kearney, executive director of Washington, DC-based ANM. . “A monopoly private sector company could try this, but that’s not what our public postal service should be doing,” he said.
“In addition to being bad public policy, we strongly believe that the regulator has granted this authority illegally and without properly taking into account recent major changes that have dramatically improved the outlook for the USPS,” Kearney said. “The missions and services of many nonprofit organizations will be greatly diminished as a direct result of this action by the USPS,” he said.
The Postal Accountability and Enhancement Act (PAEA) of 2006 capped price increases for postal services at the Consumer Price Index (CPI), the rate of inflation. The PAEA also asked the PRC to assess the price cap system 10 years after the date of promulgation and to modify or replace the system if it did not meet the objectives of the law, which resulted in the report. “Delivering for America”.
In November, the PRC announced new dominant pricing rules in the market, allowing inflation-linked price increases based on certain factors and giving the USPS more flexibility in pricing services. postal. The decision allowed the Postal Service Authority to set higher tariffs for postal services, above the rate of inflation. “Aligning our prices for dominant products in the market will allow us to increase our revenues and achieve financial viability to fulfill our universal service mission,” said Joseph Corbett, Chief Financial Officer and Executive Vice President of the USPS.
The USPS estimates that it has generated $ 55 billion in cumulative gross revenue since 2006 based on the density rate authority of the recent PRC ruling. The PRC allows the authorization of rates above inflation based on density (4.6%), non-compensatory mail (2%) and pension costs (1%).
According to the USPS, the 10-year plan is designed to reverse forecasts of $ 160 billion in operating losses over the next decade, including proposed price changes, as well as the necessary legislation, that would allow $ 40 billion. dollars over the next 10 years to modernize and improve Infrastructure.
Almost two-thirds of the $ 160 billion identified in Delivering for America will require approval from Congress and the PRC. Postal increases above the rate of inflation would represent $ 44 billion of the $ 160 billion, according to the ANM, and would likely accelerate the exit of senders from the postal system.