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Postage rate increases in late January will now total a whopping 6%

On December 24, the Postal Regulatory Commission announced that it is granting the Postal Service its first-ever “exigent” rate hike, allowing postage rates to rise another 4.3% on top of the inflation adjustment of 1.7% already approved.

This overall 6% increase will go into effect on January 26th and will impact all classes of mail.  The 4.3% exigent portion, authorized as a way for the USPS to recoup the billions it says it lost during the recent severe recession, is supposed to last no more than two years, while the CPI increase of 1.7% is permanent.

Although consumer and trade groups are already lobbying Congress to roll back these dramatic hikes, it is best to begin planning now for how these higher postage rates are going to affect your mailing program.

 What are some of the ways you can lessen the impact of this postage rate hike?

MailSmart Logistics may be able to help you offset these higher rates in a number of ways.  Using our proprietary rate analysis software, and working closely with our partners, Pitney Bowes Presort Services and MMI Direct, we have been able to save our clients significant sums despite the rate hikes that have occurred year after year.

If you would like to hear our recommendations, please call us now at 443-539-2640 or drop us a line. Don’t let this rate hike take over your budget. The MailSmart Logistics team can help you find ways to soften the blow and keep your mailing program as cost-effective as possible, despite the significant 2014 postage rate increases.

The USPS has filed a request with the Postal Regulatory Commission (PRC), seeking a 5.9% increase for First Class, Periodicals, Standard Mail (which includes nonprofit) and Bound Printed Matter.

This rate greatly exceeds the annual Consumer Price Index (CPI). An above inflation increase must be approved and measured against financial hardship deemed as “extraordinary” or “exceptional” under the law.

If approved, the postage increase would go into effect on January 26, 2014 and would generate $2 billion in incremental annual revenue for the financially struggling Postal Service.

A sampling of how USPS rate requests would impact 2014 postage rates:

• Letters (1 oz.) would increase from 46 cents to 49 cents
  • Additional ounces would be 21 cents, a 1 cent increase
• Postcard rates would increase 1 cent to 34 cents
• And for our nonprofit clients, the postage for a typical 150,000 piece mailing would increase by $1,098.05!

The PRC can approve the rates as requested or change the rates by individual cell.  Proposed rates can be found here.

A letter from the Chairman of the Board of Governors, Mickey D. Barnett, cites the need to close the $20 billion budget gap.  The letter further explained that the rate increase is a last resort to maintain the services and quality of the USPS.  The rate increase would be reconsidered if postal reform legislation were enacted by Congress.

Tony Conway of the Alliance for Nonprofit Mailers helps evaluate the complete picture in a letter released on September 25, 2014.  In it he states,”The Alliance strongly supports legislative relief for these problems, and it is unfortunate that none has emerged from Congress.”  The letter continues, “…it would be equally unfortunate to penalize mailers for the excess costs that other interest groups have forced the USPS to continue incurring.”

Of note in this debate is the fact that the USPS does not receive tax dollars; its operations depend solely on the revenue generated by its services.

MailSmart Logistics is following the situation closely and will continue to keep you informed of any new developments. We’re here to answer any questions you may have – call your MailSmart Logistics representative at 443.539.2640.