You may have seen the news that earlier today the USPS Board of Governors announced the Postal Service will seek an across-the-board price increase, effective January 26, 2014, of 5.9%. The postage increase is made up of two parts: 1.6% is based on the CPI rate cap, with the remaining 4.3% based on an exigent increase.
What made headlines was the proposed price increase of a First-Class Mail single-piece letter from 46 cents to 49 cents. What is unknown at the moment, and what is a larger issue for the bulk of direct mail efforts, is the proposed increase in Standard Mail rates. That is part of a filing to the Postal Regulatory Commission (PRC) scheduled to take place tomorrow.
It’s also worth noting that the USPS announced its financial results for the first 11 months of FY2013:
- YTD “controllable” operating loss was $711 million, 64% less than the same period last year (SPLY)
- YTD net operating loss, inclusive of retiree healthcare accrual and workers compensation adjustments, was $4.95 billion
- YTD revenue was 1.4% over SPLY
- YTD “controllable” operating expenses were 0.7% under SPLY
- Total mail volume was off 1.0%, but revenue was up 1.4%
- Standard Mail volume was up 1.6%, with revenue up 2.7%
- First-Class Mail volume continued its decline – down 3.9% YTD, with revenue off 2.1%
The cost and revenue trends (and even Standard Mail volume) are moving in the right direction. We’ll have to wait to see whether an exigent rate increase will affect future results and by how much.
The PRC has 90 days to review and approve the exigent portion of the increase before it can take effect. During that process the Postal Service needs to prove that an exigent situation exists and that the amount of the increase corresponds to the need created by the exigency. The commission has wide latitude on what to do with this portion of the request.
Stay tuned to SpeakingDIRECT as we will keep you up-to-date on the decision, what it means for your mailing budget, and what strategies are available to help offset any potential rate increases.
Subscribe via email to our Stevie® and Feedspot award-winning blog and get a fresh post delivered weekly to your inbox. We promise to keep it interesting, but you can easily unsubscribe if we don’t.