Forced USPS price reductions begin Sunday

US national postal operator USPS has issued a statement saying that it will lose around USD $2bn is annual revenue as a result of a forced price reduction that will come into effect this Sunday coming (10 April). The price reduction has been called for by the US Postal Regulator Commission (PRC) as part of its enquiries into the health of the postal operator.

Beginning in 2014, the PRC granted an exigent surcharge on mailing products and services in order to help the USPS compensate for the volume and revenue losses stemming from the economic dip that the US has not effectively recovered from since 2007. Effective on Sunday the exigent surcharge will now be removed.

Megan J Brennan, US Postmaster General and USPS CEO said in a statement, “Given our precarious financial condition and ongoing business needs, the price reduction required by the PRC exacerbates our losses.

“This unfortunate decision heightens the importance of the review of our ratemaking system which our regulator is required to conduct later this year.”

The same statement also said that the PRC is required to review the market dominant regulatory system and to determine whether it is achieving the statutory objectives that have been mandated by Congress. It is empowered to modify the system or create a new charging system as necessary to meet the objectives. This obligation to conduct the review comes ten years after the enactment of the Postal Accountability and Enhancement Act that occurs in December.

“To provide clear guidance to all interested parties concerning the review process, we filed a petition today with our regulator to clarify the scope of the review and which provisions of the current regulatory structure are subject to potential modification or replacement,” said Brennan.  “By addressing preliminary issues now, the PRC can ensure an expeditious and efficient review.”

Brennan said that the USPS will “continue to seek legislative reforms to put the Postal Service back on a sustainable financial path”, adding that “pricing is an important component”. The mail operator is putting forward a number of proposals that include reinstating the exigent surcharge and making it permanent.

While the USPS may object to the surcharge removal, its statement did include a useful table summarising the First-Class Mail price reductions:

Current

Mandated Reduction

• Letters (1 oz.)

49 cents

47 cents

• Letters additional ounces

22 cents

21 cents

• Letters to all international destinations

$1.20

$1.15

• Postcards

35 cents

34 cents

Share

Comments are closed.