Wednesday, December 15, 2010

How will the 1.8% increase affect Bulk Rates?

One of the readers of this blog asked the question that is the title of this post.  To answer this question before the Postal Service files a case requires both a review of the exigent rate increase as well as some fairly simple calculations.  Here would be my working assumptions and are based on what would appear to make the most business sense from the Postal Service's perspective.  However there may be regulatory or legal restrictions that prevent using the the pricing authority in a way that would maximize the Postal Service's revenue from the available authority to raise rates.
  • Bulk First Class Rates will likely rise by less than the 1.8% average for First Class as whole.  The size of the increase will be smaller than the average to allow for increases in single piece rates by full penny amounts and to raise First Class parcel rates  (and more than likely the extra ounce rates) in line with rate increases announced for Priority Mail.
  • Bulk Standard Class Rates will likely see increases in parcel rates at least as great as rates announced for the Postal Service's competitive products.  If the Postal Service can cost justify the rate increases, I would not be surprised if the Postal Service tried to use as much of the the rate increase authority for Standard Mail that it can on Standard Mail Parcels which should hold other Standard Mail rate increases at no more than 1.5%.
  • All other Bulk Rates are in classes that will likely see rate increases close to the average permitted by CPI index.
The other major change that a likely February increase will have will be the shift the timing of future annual rate increases from late Spring to February.  This will put rate increases of all Postal Service products closer to the time when most of its competitors also raise rates.

1 comment:

Anonymous said...

USPS sources are still saying a May increase