The US Postal Service has stepped back from significant price increases for letter productsfollowing opposition from regulators and customers.
USPS originally wanted to raise prices from January 2011 for most of its letter products andservices by 4-6%, including a two US cent rise in the basic stamp price to 46 cents, and to hikestandard parcel rates by 23% to compensate for slumping revenues caused by the decline in mailvolumes.
These increases would have raised about $2.3 billion in additional revenues for the heavilyloss-making organisation during January-September 2011, the last three quarters of its 2010/11fiscal year, and a further $3 billion for the full 12 months of fiscal year 2011/12.
But the rate increases were rejected by the US Postal Regulatory Commission, and USPS iscurrently appealing against this decision.
Now, the world’s largest postal operator has done a U-turn by filing new mailing service priceswith the PRC for introduction on April 17, 2011. The overall increase would be limited to theConsumer Price Index (CPI) cap of 1.7%, although actual percentage price increases for variousproducts and services would vary, USPS announced.
The basic price for a first-class letter would remain unchanged at 44 cents. First-class parcelswill go up by 3.8% and international mail will be 4% more expensive. Standard mail parcels willincrease 11.3%. Express Mail and Priority Mail prices are not affected by the priceannouncement.
The proposed price changes are expected to generate $340 million for the balance of the fiscalyear and $720 million if implemented for a 12-month period, USPS pointed out.
Postmaster General Patrick Donahoe said the measures signalled a new direction in continuing toimprove customer relations by consulting with industry representatives on the effective date fornew prices and by relaxing some guidelines on implementing Intelligent Mail services. “Workingtogether as an industry we can address continuing economic challenges in a way that allows thePostal Service to generate much needed revenue while being more responsive to ongoing customerneeds,” he said.
The new prices give the mailing community more than 90 days to make the necessary technologyand system changes to accurately handle the new prices. “We heard concerns that we were moving toofast on discontinuing POSTNET coding, and we will continue to offer the automation prices for mailwith POSTNET barcodes beyond May 2011,” he said. Donahoe emphasised the value of the IntelligentMail barcode (IMb) to mailers and reiterated the Postal Service commitment to implementing theIMb.
