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.

By Jonathan Berr Sep 4, 2013 2:42PM
U.S. Postal Service letter carrier of 12 years, Jamesa Euler, delivers mail in the rain in Atlanta, on Feb. 17, 2013 (© David Goldman/AP)The U.S. Postal Service's biggest customers are sounding the alarm bells about a potential double-digit emergency rate increase that may be approved as soon as Thursday.

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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371Comments
Sep 4, 2013 3:40PM
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The feds have no clue how to save money. We do not need delivery on Saturday. Congress is filled with idiots.
Sep 4, 2013 3:32PM
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Here is a great idea... Kill Saturday delivery:)
Sep 4, 2013 3:26PM
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Because of the rising costs of food, stamps, gas and everything else I wish I could go to my boss and tell him I need a raise to cover my expenses..
Sep 4, 2013 3:52PM
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USPS: another union-caused failure to be bailed out by the public.  A friend's father worked for USPS for over 40 years, and even he said the union was going to kill the post office through unsustainable practices.  Employees  were given a generous amount of vacation time annually, and what they didn't use was allowed to accrue forever with no limit...  and mind you, vacation banked 10 or 20 years ago would get paid out at an employee's current wage when he or she finally cashed it in when they quit or retired.  Same deal on paid sick leave - unused amounts accrued forever, and then got paid out at the employee's final wage.  Then there's the age-old problem of lazy or incompetent workers mixed in with the honest, skilled, hard working ones...  the problem being that the lazy or incompetent ones were basically fire-proof because of the union's protection... especially if the employee in question was a big union supporter.  You can say what you want about the internet and management failures, as they're a part of it, too... but the biggest cause of USPS's problem is decades and decades of unsustainable practices demanded by the postal workers' union.
Sep 4, 2013 3:48PM
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For God's sake, who really needs mail on Saturday?  I ship 30-40 packages a week for my Internet business and NEVER make a drop on Saturday.  This seems so easy.  Right now Fedex Ground is 20-25% lower cost than USPS priority and parcel delivery. They don't deliver on Saturday.  I used the ship almost 75% of my sales USPS Priority, no more.  Fedex is cheaper, more reliable and trh Saturday shipping make no difference at all.   
Sep 4, 2013 4:17PM
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There is no reason we need to subsidize those that send out all the junk mail.
Sep 4, 2013 3:37PM
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They don't want to pre fund the health care for retirees? This is why the state and local governments are all in trouble, they keep kicking the can down the road and we are rapidly approaching the end of the road. The most amazing thing is that congress actually mandated something that was financially sound. They can pay now or pay later, but pay they will. Congress needs to quit meddling and let them close offices and curtail Saturday service. All I get on Saturday is a bunch of worthless adds that I could do without all together, nothing that can not wait until Monday.
Sep 4, 2013 4:22PM
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They've got a whole bunch of folks who don't do 3 hours worth of work in 8 plus hours, I can state that as witnessed fact
Sep 4, 2013 4:05PM
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USPS:  United States Pension Service

Sep 4, 2013 4:09PM
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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.

Sep 4, 2013 4:01PM
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Credit line with the Treasury? Really? Who thought this was a good idea?

Sep 4, 2013 4:23PM
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The problem here is that the post office operates as a business, but is controlled by the federal government.  They have to break even but give employees the usual government benefits.
Sep 4, 2013 3:56PM
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I thought congress passed a bill, several years ago, that said the Postal Service could not raise the rate higher than inflation.
Sep 4, 2013 3:32PM
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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.

Sep 4, 2013 4:09PM
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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

Sep 4, 2013 4:23PM
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The post office needs streamlining to survive. The could raise the cost of stamps to 75 cents without losing a lot of business but waste is the main issue - just like a lot of other government ran departments.
Sep 4, 2013 4:03PM
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Dont stop Saturday delivery.  That is the cheapest delivery day of the week.  If you want to save money eliminate Monday delivery.  If you are shut down on Mondays anyway, then you wont have to pay all the workers for holiday pay for all the Monday holidays throughout the year.
Sep 4, 2013 3:31PM
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Don't NEED  saturday - raise the prices to the users NOW !!!!
Sep 4, 2013 3:30PM
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The Obama Health Care is about to do in the US Postal Service.   Good going Obama!
Sep 4, 2013 5:46PM
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Why won't the media tell the truth about WHY the USPS is losing so much money? Think "We The People" might not like Congress forcing the only company in the history of the Capitalistic Free Market to pay for retirement benefits 75 Years BEFORE the USPS hires that individual. Congress is robbing the USPS, to cover the money they stole from our Social Security, so they could cover their over-sized budget deficits, to make themselves not look like the elitist pricks that they are.
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