THE COST OF BUSINESS

U.S. Post Office Raises Rates In 2014



A post office rates raise is almost as guaranteed as receiving your mail through rain or shine, snow or sleet. Both U.S. postal shipping rates and first class mail rates went up in 2014; shipping rates increased by 2.4 percent and first class stamps are now 49 cents apiece, up 3 cents. The new rates went into effect on January 26.

The U.S. Postal Service is still suffering major financial losses, thus requiring it to make up the difference elsewhere. It ended the 2013 fiscal year with a net loss of $5 billion. This marks the seventh consecutive year the government-run agency has incurred a net loss. The U.S. Postal Service has reduced annual expenses by $15 billion, but said onerous mandates in the Postal Accountability and Enhancement Act (2006) and continued first-class mail volume decline has threatened its financial viability.

“We’ve achieved some excellent results for the year in terms of innovations, revenue gains and cost reductions, but without major legislative changes we cannot overcome the limitations of our inflexible business model,” said Patrick Donahoe, Postmaster General and Chief Executive Officer. “Congress is moving forward with legislation that has the potential to give us greater flexibility and put us back on a firm financial footing, and we strongly encourage that they continue moving forward.”

Shipping Changes

One of those innovations is shipping options. Priority Mail Express now has a new domestic shipping service that allows customers to send packages to most U.S. locations by 10:30 a.m. for an extra $5 fee.

Highlights of the new retail pricing for domestic Priority Mail Express products include:
• Retail Flat Rate, Padded Flat Rate and Legal Flat Rate envelopes - $19.99
• Flat Rate Boxes - $44.95

“The Postal Service remains the best in value in the shipping business,” said Nagisa Manabe, Chief Marketing and Sales Officer. “We continue to offer excellent domestic Flat Rate shipping with a price that doesn’t vary by destination.”

First Class Mail Rates

The proposed first class mail changes are intended to generate $2 billion in incremental annual revenue for the Postal Service. Highlights of the new single-piece First-Class Mail pricing, effective Jan. 26, 2014 include:

• Letters (1 oz.) - 3-cent increase to 49 cents
• Letters additional ounces - 1-cent increase to 21 cents
• Letters to all international destinations (1 oz.) - $1.15
• Postcards - 1-cent increase to 34 cents
Pricing for standard mail, periodicals, package services and extra services will also be adjusted by 6 percent.

The Governors of the Postal Services voted last September 24 to seek price increases above the typical annual increases associated with changes in the Consumer Price Index due to the “precarious financial condition” of the Postal Service and the “uncertain path toward enactment of postal reform legislation.” The rate hike is supposed to be temporary, lasting only for two years so the U.S. Postal Service can recoup $2.8 billion in losses.

“Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges,” said Postal Service Board of Governors Chairman Mickey Barnett in the letter. “However, if these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy. We are encouraged by the recent introduction of comprehensive postal reform legislation in Congress, and despite an uncertain legislative process, we are hopeful that legislation can be enacted this year.”

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