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Postal Service Proposes More Rate Increases in 2007

(May 4, 2006) The United States Postal Service (USPS) has filed yet another Omnibus Rate Case, proposing to raise postage rates again by 8.5 percent on average, including a three-cent increase in the price of a first class postage stamp.

On May 3, the USPS filed its case with the Postal Rate Commission, arguing that the rising costs of fuel and employee benefits necessitate another rate increase. Charities just began feeling the impact of the last rate case, getting hit in January of this year with a 5 percent postage increase on average.

The Alliance of Nonprofit Mailers reports that on average:

  • Nonprofit Standard Mail will increase 9 percent
  • Periodicals will increase 11.7 percent
  • Light weight flats (i.e., under 3.3 ounces) will see increases from 9 percent to 25.6 percent depending on presort and drop-shipping capabilities

In addition, Standard Mail would increase by on average 9 percent, Express Mail 12.5 percent and Priority Mail 13.8 percent.

In order to offset the impact of the increases, the USPS is also proposing new discounts based on both the weight and shape of mailings. Current Postal Service prices do not distinguish between some letters, flats, and parcels. For example, in First-Class Mail, the current single-piece price is 63 cents to mail a 2-ounce letter, a 2-ounce flat, and a 2-ounce parcel. The new plan recognizes that each of these shapes has substantially different processing costs and should have different prices.

As mailings become heavier, the proposed price increases would actually decline. However, the overall impact of the increases tends to outweigh these relatively minor discounts.

As part of the rate case, the Governors of the USPS also proposed a "forever stamp" that would be scheduled to go into effect next year. Customers would be able to purchase a special First-Class stamp which would be good for any future single-piece First Class letter mailing, no matter how prices might change beyond 2007. "A forever stamp would help ease the transition to any future price adjustments," said Board of Governors Chairman James C. Miller III.

The proposed increases would be set to take effect in the spring of 2007, although the Postal Rate Commission must conduct a thorough review and hearing process and determine whether or not to recommend new rates.

AFP will be working with the Alliance of Nonprofit Mailers and other organizations to minimize the impact of the rate case on charities and will keep members informed as the rate case moves forward and action is needed.

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