No postage rate increase this coming January. This is good news for online sellers and presumably a nightmare for the USPS which needs to find $5.5 billion this year as they are required by law to pre-fund retiree health benefits.
The independent Postal Regulatory Commission has denied a special rate increase for first class mail letters, postcards, periodicals, parcels and other services requested by the Postal Service last July to be effective January 2011.
The proposed increases would have raised the cost of a letter to 46 cents, other mail categories ranged between 4% to a swingeing (def.#1) 23%. The last first class rate increase was in May 2009, from 42 cents to 44 cents.
The Postal Regulatory Commission did not mince words,
… the case for a permanent $3 billion a year revenue boost is not made by passing reference to “dire financial circumstances.” Postal Regulatory Commission Order #547 page 58
Mail volume continues to drop with every increase.
The Affordable Mail Alliance, a pressure group coalition of postal customers says it is all about inefficiency.
“In Fiscal Year 2007, the last complete fiscal year before the start of the current recession, the Postal Service still carried an infrastructure and workforce designed to handle 300 billion pieces of mail annually - almost 50% more than actual mail volume.”
The Postal Service expects losses of at least $6.5 billion in the fiscal year that ended yesterday and anticipates another $7 billion loss next year. In an interesting opinion piece on Politico.com, Senator Susan Collins of Maine who has authorization and appropriation oversight over the Postal Service said
“There is a financial truism that every American family knows instinctively and every economist knows by rote: When goods are priced too high or services lose value, people cut back on spending. That can be counted on — like clockwork. And sometimes, when consumers cut back, they also turn away.
Customer sensitivities to pricing and service are known market responses. Successful entrepreneurs find the right balance and work to keep it — using innovation to draw new customers, maintain current ones and increase the franchise.”
We like to complain about the cost of postage in America but we should probably be on our knees giving thanks. Postage in the USA is downright cheap compared to other countries.
Lets compare two sellers costs, Marie lives in Quebec Canada and Bertha lives in upstate NY. Both have two identical packages to mail.
Marie will pay Canada Post $13.89 to mail her 10oz (300g) envelope Express Post (2 days) to Alberta with delivery confirmation. If she had chosen Parcel post (6 days) it would have cost her $11.88 An identical package to Utah will cost her $16.33 to send Expedited Parcel with delivery confirmation.
Bertha will pay USPS $2.94 to mail her 10oz envelope First Class to Utah, with delivery confirmation. Her identical package to Alberta, sent First Class International will cost her $5.01, delivery confirmation is not available.
Y’all come back!