10/12/2012 9:01 PM ET|
How higher postal prices affect you
Even people who don't use the mail much might feel the impact of increased shipping costs for companies.
Starting Jan. 27, the price of a first-class stamp goes up by a penny to 46 cents, and the price to mail a postcard rises by the same amount to 33 cents. International letters will now cost $1.10 to send, up from 85 cents toCanada and Mexico and $1.05 to other destinations.
But even a public that has switched from the printed word to Skype, FaceTime and other technologies should be concerned about the 4% overall boost in mailing and shipping prices and 6.3% hike in priority mail fees. Why? One simple reason: Overhead.
If consumers still have Netlix (NFLX) discs delivered, despite that company's best efforts to shake DVD customers loose, or turn their homes into mazes of Amazon (AMZN) packages around the holiday season, the Postal Service's price increases could take a toll. Those hikes in shipping rates cut into companies' bottom lines. That cost inevitably gets passed on to the consumer, be it through increased shipping rates, increased fees or changes to shipping policy.
Netflix, already trying to reduce its dependence on the USPS by luring customers to its digital streaming service, still has more than 10 million DVD-by-mail customers. Amazon, meanwhile, has attempted to cut the Postal Service out of its price model by using third-party logistics firms like same-day shipping service LaserShip to complete orders. Online consumer reaction to that service has been decidedly mixed.
Now Wal-Mart (WMT) is getting into the mix with plans for its own Wal-Mart To Go same-day delivery service that relies largely on shipments from its existing retail facilities and could bypass the Postal Service altogether if the price isn't right. USPS could use the business after a 2006 law drained its resources by ordering the Postal Service to put money aside for future retiree benefits. It has since borrowed $12 billion from Congress just to stay afloat and started closing mail processing plants to cut costs.
Americans may have less coming in and out of their mailboxes than they did a decade or two ago, but what's there requires the Postal Service to make it work. Threats last year to increase delivery times for First Class mail to two to three days sent ripples through Netflix's share price, while calls to cut $20 billion from USPS operating costs by 2015 were heard by everyone from eBay (EBAY) sellers to Zappos-addicted clotheshorses.
With Congress vowing to forego any further Postal Service assistance until after Election Day, more cuts and price hikes could be coming to a mailbox near you... even if you haven't bought a stamp or licked an envelope since the last Bush Administration.
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