In separate orders, the Postal Regulatory Commission has approved price changes for 2020 for USPS competitive products and most market-dominant products, but rejected the Postal Service’s proposed prices for First-Class Mail (at least for now).
Competitive Products
In a November 15 order, the PRC approved the prices for competitive products that had been announced by the Governors of the Postal Service on October 9. In its order, the commission stated that the new prices will cover each product’s attributable cost; that competitive products as a whole will contribute 23.9% toward USPS institutional costs (well above the required 8.8%); and that competitive products will not be cross-subsidized by market-dominant products.
Other than increases in price, mostly below four percent for commercial products, there were very few structural changes: dimensional weighting was retained (and extended to all zones for USPS Ground), and an Unmanifested Electronic Verification (e-VS) fee was introduced for expedited products.
First-Class Mail
On November 13, the PRC issued an order remanding back to the Postal Service the proposed rate changes for First-Class Mail.
In its order, the commission explained that, as currently proposed, the Postal Service’s planned price increase would exceed the statutory price cap because an “impermissible adjustment” to data for inbound letter post led to the USPS to “incorrectly” calculate the percentage change in rates. The commission calculated the proposed change to be 2.109%, exceeding the cap (1.933%). There was no issue with the other domestic retail and commercial First-Class rates proposed by the USPS.
On November 20, the Postal Service filed two documents in an attempt to resolve the issue. The first sought to accelerate the transfer of inbound letter post to competitive products, making it effective January 1, 2020, rather than July 1, 2020. If the PRC approves this request, it would mean the category would no longer be included in First-Class Mail, and therefore not factored in the price cap calculations for the class.
The USPS also filed an amended proposal for First-Class Mail prices and revised workpapers that remove inbound letter post from the price cap calculation entirely, to reflect the accelerated transfer that it had requested. A November 21 order established a comment period through November 27 regarding the latest USPS filings, so any decision from the PRC regarding First-Class Mail prices shouldn’t be expected until at least December.
Other Market-Dominant Classes
In another order issued late on November 22, the PRC approved – largely as filed – the Postal Service’s proposed 2020 prices for the market-dominant classes other than First-Class Mail (Periodicals, Marketing Mail, Package Services, and Special Services); there were no substantive structural changes.
For Marketing Mail, the PRC approved all proposed workshare discounts, adding that it “recommends that the Postal Service continue its plan to reduce all passthroughs that are greater than 100% by at least 10 percentage points” in its next general price proposal.
The PRC also approved all of the promotions for Marketing Mail as they were proposed by the USPS, and the prices for Periodicals, Package Services, and Special Services mostly as proposed by the Postal Service.
The now-approved market-dominant prices for all but First-Class Mail and the prices for competitive products remain scheduled to take effect at 12:01am, January 26, 2020. Assuming the PRC can shortly approve the USPS proposal for First-Class Mail, those rates should take effect at the same time as the rest.
Leo Raymond is the owner and managing director of Mailers Hub, which is dedicated to providing information, resources, training, and expert advice to support mailing service providers and help them succeed. He can be reached at lraymond@mailershub.com.
