Postal Service may be preparing a huge rate increase
Companies that do a lot of mailing see a double-digit hike coming, but USPS officials are mum on their plans.
A statement from Affordable Mail Alliance argues that "a drastic above-inflation rate hike" would cause cause people to curtail their use of the mail, exacerbating the Postal Service's financial woes. Members of the Alliance, which include direct marketers, magazine publishers and newspapers, further explained in a letter to the USPS' board of governors that such an increase "would not only be profoundly ill-advised, but clearly self-defeating to recovering postal financial stability" in light of the service's improving financial picture.
Of course, that's all relative. During the fiscal quarter ended in March 31, the USPS lost $1.9 billion compared with a $3.2 billion drop a year earlier. It lost $740 million in the most recent period. But the USPS isn't really saying much about its plans.
"The Governors continue to explore the possibility of filing for price adjustments later this year," USPS spokesman David Partenheimer wrote in an email to MSN Money. "No final decisions have been made."
First-class mail volumes are expected to slide to 21 billion this year, less than half the 51 billion seen in 2003 as skyrocketing Internet use has sent the USPS in a financial tailspin. Earlier this year, the post office proposed eliminating Saturday delivery to cut costs, only to back away from the plan after some members of Congress objected.
The agency's finances were in dire shape last year when it twice defaulted on payments totaling $11 billion, and it burned through a $15 billion line of credit from the U.S. Treasury, according to CNNMoney.
Officials at the UPS have long argued that its finances are hobbled by a congressional mandate that it prefund the health care costs of future retirees, which as The Washington Post recently noted, is common in the private sector but unusual for federal agencies. This obligation costs the USPS as much as $5.5 billion annually, about the same amount it expects to lose this year, the paper says.
Follow Jonathan Berr on Twitter @jdberr.
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The main problem in the postal service is management. They let go of important staff they say to save money but then they have older workers doing overtime to get the work done that needs to get done because they are not hiring. They have no idea how much work the floor employees do and they could not do it themselves.
The Postal Service was not only asked to fund for their own retirees they are having to fund for other federal retirees programs. Bet you did not know that. They cannot keep up with funding all retirees programs in the government. They should not have to.
Congress needs to make two big decisions- Stop the postal service from having to pre-fund more than their retiree program and vote to stop giving themselves free-health coverage at the tax payers expense. Make Congress buy their own health coverage like the regular person has to.
I sell on Ebay and have increased my First class and Priority mail shipping several times. I also do lots of overseas Priority mail shippig.
Post office has vast reservoir of First class shipper among average consumers. However Post Office web site do not allow to print first class mail. If they do it I am sure they can double their First class volume. Presently only businesses use them through third party shipping module that average household do not need and cannot afford.
Secondly Post office made their shipping module too complicated from its ordinary simple module used before redesign. I have written them many time and participated in their customer survey. but no changes coming.
Thirdly Flat rate shipping is dishonest way to increase revenue from less sophisticated consumers. In general those rate comes out much higher than otherwise are on non-flat rate shipping.
They can also increase their revenue by reducing complexity of International shipping where they ark too much information even for small shipping. Foreign packages coming in usa, even from china one small chit of hand written minimal info.
These are not rocket science. It is simple way to be consumer friendly and getting business form ordinary folks. Complexity in a killer to cost for all activity in this country. Collecting too much info that has little value and very hard to be useful and when useful it covers like lottery winner kind of incidences.
I think services rendered by the USPS have to be among the cheapest in the world, and even if many poke fun at them calling them snail mail and other monikers, my mail always gets over there timely, and makes it timely into my mailbox as well.
The USPS is an American institution that we have to protect. I bet many "investors' are salivating on the possibility of owning a few shares of it once it becomes privatized and into the hands of the rich and wealthy, Chinese and others, with cash to burn. When they do, let's see if we will still be able to mail something for a few pennies
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