Live from Washington: USPS to Raise Rates Again in July

Washington—In an unusually crowded Ben Franklin Room at the United States Postal Service headquarters here, the USPS Board of Governors (BOG) on May 8 announced that it will raise rates on July 1 across the board by an average of 1.6%.

The rate for basic presorted flats will rise from $0.319 a piece to $0.322, an increase of less than 1%. The cost of mailing basic automated flats is increasing 1%, from $0.275 a piece to $0.278. The per-piece mailing cost for automated 3/5 flats will rise 1.2%, from $0.236 to $0.239. And the basic enhanced carrier route rate for flats is increasing 1.1%, from $0.176 to $0.178.

“The governors reluctantly decided to adjust rates to make up for a $975 million shortfall,” BOG chairman Robert Rider said in announcing the hike. “We found that this increase adds essential revenue—the rates are going to be adjusted only to the extent that costs match revenue.” In other words, the increase should enable the USPS to fend off a loss, but it was not meant to help it generate a profit.

The decision marks the second time in the 30-year history of the USPS as a quasi-governmental agency that the BOG has overturned the Postal Rate Commission (PRC). After the PRC cut the USPS’s rate hike proposal from 6% to 4.6% on average in the increase implemented in January, the PRC twice this year rejected BOG appeals for a larger increase. By law, the BOG can overturn the PRC if the vote is unanimous.

“I’m incredibly disappointed,” Bob Wientzen, president/CEO of the Direct Marketing Association, told CATALOG AGE. “My reason is twofold: One, this negates a significant amount of effort that we and many others made to carefully present a case for not granting the Postal Service these dollars. Now there’s an arbitrary decision to overturn the PRC’s careful deliberations. But my biggest disappointment is that the Postal Service seems bent on increasing rates as a way of meeting its revenue shortfall rather than cutting costs.”

The BOG and postal management have in recent months been warning that it will propose another rate increase this summer. Some mailers had hoped that a July increase would put off the need for another rate hike. According to Wientzen, “They’re still talking about filing late this summer, though there are some discussions about postponing it a little bit. My sense is they plan to go forward with [another rate case]. This suggests they have only one remedy in mind for their deteriorating business, and that is to raise rates, and that will continue to reduce their revenue.”

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