Postal Service Files for Competitive Product Rate Hikes

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First Class Packages increase 12.8% over three years. More substantial increases loom for Commercial Plus service, which is slated for elimination in 2017.

The U.S. Postal Service has filed a rate change notice for competitive products with the Postal Regulatory Commission (PRC). The new prices are aimed at meeting the statutory obligation that these products contribute at least 5.5% to the Postal Service's institutional costs.

Should the new prices be approved by PRC, they won't take effect until 2016, after the holiday season. Priority Mail prices will increase 9.8% on average over three years, though Commercial Plus prices will take a drastic upturn in January. Priority Mail rates for the high-volume customers using this service will go up 13.3% in the new year, and Priority Mail Express will rise 48.2%. In the notice USPS stated its goal was to eliminate Commercial Plus sometime in 2017.

Rates for First Class Packages used by businesses for fulfillment will increase 12.8%. The under-a-pound service will eliminate the three-digit, five-digit, and ADC presort levels, and the under 16-oz. pricing available under Commercial Plus will be consolidated into the Commercial Base price category.

Other changes put forth by USPS in the filing:

  • Parcel Select Non-Presort will be renamed Parcel Select Ground.
  • Standard Post will be re-christened Retail Ground.
  • Priority mail will offer merchandise insurance up to $200 and document insurance up to $100.
  • Parcel Select Lightweight machinable and irregular price tables will be combined.

Other major players in shipping, notably UPS and FedEx, have for years charged that the Postal Service has been able to undercut their prices by subsidizing the institutional costs of its package business with contributions from its market dominant businesses.

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