Despite falling mail volume (-6.7% Fiscal Year to Date) and falling revenue (-.4% FYTD), the USPS has filed a rate case that uses practically all of the rate increase authority available to them.
The rate case was filed on April 10th, 2023 with the Postal Regulatory Commission (PRC), requesting a postage increase starting July 9, 2023. This increase will impact the USPS “Market Dominant” products, including First Class Mail and Marketing Mail.
No word yet regarding the “Competitive” products – Priority Mail and Parcels, rates may not increase until the seasonal adjustments expected starting in October. However, given that USPS’s new Ground Advantage product takes effect on July 9 as well, there is speculation that some competitive products could get hit with a mid-year price adjustment. The Board of Governors meet on May 9, and updates may be available after that meeting.
Overall the rates will increase by an average of 5.378% for First Class, and 5.381% for Marketing Mail, but as always, the details are important. Here are the increases for some common rates:
|Straight First Class Letter||$.66||4.76%|
|Letter Mixed AADC||$.561||5.65%|
|Letter 5 Digit||$.498||5.73%|
|Straight First Class Flat||$1.35||7.14%|
|Flat Mixed AADC||$1.234||15.54%|
|Flat 3 Digit||$1.037||15.74%|
|First Class Canadian||$1.50||3.33%|
|Marketing Mail – Commercial||5.381%|
|Letter Mixed AADC||$.381||5.83%|
|Flat Mixed AADC||$.976||8.93%|
We are expecting the PRC will respond within 45 days, by May 25th, but could finalize as early as May 19th, the Friday before the USPS National Postal Forum. Updates regarding these rates will be posted to this blog.
The rates are broken down as follows:
|Rate Increase Breakdown:|
|First Class – Overall||5.378%|
|Marketing Mail – Overall||5.381%|
CPI- U = Consumer Price Index for all urban consumers, calculated from September 2022 through February 2023
Density Authority = A calculation that takes into account the increased cost of delivering fewer letters and packages to more addresses
Retirement Authority = A calculation that takes into account the ability of current revenues to cover the USPS it’s retirement obligations.