Consultant’s Corner: Another round of USPS price hikes expected in July

The United States Postal Service is planning another round of price hikes as it continues to reset its network amid declining mail volumes and rising costs. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] “As operating expenses fueled by inflation continue to rise and the effects of a previously defective pricing model are still being felt, these price adjustments are needed to provide the Postal Service with much-needed revenue to achieve the financial stability sought by its Delivering for America 10-year plan,” USPS said in a statement. “The prices of the U.S. Postal Service remain among the most affordable in the world.” Pending approval from the Postal Regulatory Commission, USPS will increase its market dominant products by an average of 5.4% on July 9. Market dominant products include first-class mail, USPS marketing mail, periodicals and package services. The proposed rate increase will see the price of a stamp rise to 66 cents from 63 cents, while flat packages will increase by 7.1%. Parcel prices in the USPS marketing mail group will see the most significant jump, 20.5%, in July. Pass-through rates are also being adjusted, lowering the discount percentage on many of the services within this group. The packaging services group, which includes Alaska bypass service, bound printed matter flats, bound printed matter parcels, media mail and library mail, will also raise rates an average of 5.4% in July, with bound printed matter parcels increasing the most, at 7.4%. USPS is also expected to increase prices for such special services products as certified mail, post office box rental fees, money order fees and insurance purchased when mailing an item. Rising costs, inflation, declining volumes USPS reported revenue of $21.5 billion in its first fiscal quarter, which ended Dec. 31, an increase of 1% year over year, but total volume, as measured in pieces, declined 4.8%. The shipping and packages group reported a 2.4% increase in revenue and a 3.5% decline in volume. Despite the decline, USPS pointed out that the volume was higher than pre-pandemic levels. Meanwhile, first-class mail revenue increased by 1.5%, with volume declining by 4.5% and below pre-pandemic levels. The Postal Service’s total operating expenses decreased by 0.6%. Still, it specifically called out its transportation expense and other operating expenses, which increased 5.8% “as inflationary pressures have led to higher average jet fuel prices for air transportation, higher average diesel prices for long-haul transportation, higher average fuel prices for delivery vehicles and utilities and higher rent costs.” To reduce such costs, USPS is consolidating facilities, reducing its air use and transitioning more mail and packages to ground delivery services. But, like FedEx , UPS and other parcel carriers, USPS is working toward improving efficiencies and profitability in a very uncertain environment and a highly competitive market. Unlike its domestic competitors, USPS is an independent government agency that answers to the government but is still expected to perform competitively in the market — a difficult task as it re-imagines its network and service offerings.

Consultant’s Corner: Another round of USPS price hikes expected in July

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