United States Postal Service Update
Will the USPS Propose Another Rate Increase in 2021?
The groundwork has been set for a rate proposal to be introduced in the coming months. The Postal Regulatory Commission has completed their review of the Postal Accountability Enhancement Act of 2006. Their findings, in a nutshell, state USPS has products that are not profitable, and have therefore granted the ability to raise rates. The USPS has been working diligently on their 10-year plan named Delivering for America. In this plan, they disclose many changes that will occur in the future. The two most glaring changes are rate increases and service days.
The rate increase is inevitable. The “BIG” questions are: what products, when, and how much? We are of the belief that at this time it is safe to say that all products will see some type of increase in the very near future. The original thought was that the USPS would only look at the products that are currently not profitable. Unfortunately, everything is on the table. The products that are under performing will see a more significant increase, and all others will see a slight increase. When could this happen? We could expect to see a Federal Register announcement proposing the increase as early as the end of May. If the announcement comes before June 1st, it’s likely to see rate increases at the end of August. This would cover the 90-day notice they are required to give when filing for a rate increase. This rate increase will most likely vary across product lines. Periodicals may see a slightly higher increase than Marketing Mail due to their negative margin. The real question is whether the USPS will take a portion of the PRC approved increase by product OR take it all now. If they take it all, some products will see an 8-10% increase.
The USPS recently announced some service day changes that will move First Class Mail from 1-3 day service to 1-5 day service. Some Periodicals will also feel the impact of this change. Periodicals that are not drop-shipped and move with the first-class mail will also have added service days. The hope is to eliminate expensive costs incurred when using air transit and move most mail through the underutilized ground network. The question that the Postal Service has yet to answer is how they determined the overall impact this proposed change will have on mail volume.
We will continue to keep our ears to the ground and keep you informed of any new information. The Postal Service is keeping their cards close to their chest, but one thing is for certain … there are substantial changes coming.