Delay in Postal Rate Increase

April 7, 2015

The US Postal Service had originally scheduled implementation of new postal rates for April 26, 2015. On March 27, the Postal Service Governors announced that they will no longer be implementing the new rates on the scheduled date. Below is the direct explanation from the USPS:

"The Postal Service Governors decided today to delay the implementation of new market-dominant and competitive rates and classification changes until all of our proposed market-dominant changes are approved by the Postal Regulatory Commission ("PRC"). This decision was primarily motivated by a desire to eliminate potential adverse impacts on postal customers that might result from a staggered implementation of our new prices. After considering the complexity of the required programming changes in view of the remand of some of our proposed changes by the Postal Regulatory Committee, the specific complications that our customers might face; the potential cost to the supply chain as a whole of a staggered implementation, the Postal Service has decided to delay implementation until all of our proposed rates and classification changes can be implemented at one time."

"While proposed prices for First Class Mail, Special Services and Competitive Products have all been approved by the PRC, prices for the Standard Mail, Periodicals and Package Services classes have twice been remanded back to the Postal Service by the PRC for a wide array of technical and other concerns that are primarily related to the complexities of the price cap and the manner in which it is calculated. Rather than subject our customers to a piecemeal implementation of our new prices, the Postal Service has decided that the best course of action would be to wait until our complete price proposal is approved by our regulator. We have no desire to saddle our valued customers with the additional costs and burdens of a staggered implementation while we work with the PRC to obtain final approval of our remaining prices. We will set a new implementation date when we propose new prices for Standard Mail, Periodicals, and Package Services in response to the PRC's March 18th remand order."

A new date has not yet been announced. Check back with Hatteras for an update.

Interested to learn more about this? Below is our update from March 20th.

March 20, 2015
What is the status of the latest proposed postage rate increases? Here is what we know.

The short story…

The rate increases planned for April 26th are in limbo. Some of the rates have been approved; some have been rejected. At this point no one is sure whether or not the USPS will move forward with the approved rates next month, or hold off on everything until the full rate case is approved.

The long story…

On March 6th, the Postal Regulatory Commission (PRC), which is an independent agency that has the authority to approve, disapprove, and modify USPS proposed rates and regulations, announced that it was returning the proposed rates for Standard Mail, Periodicals and Package Services back to the USPS for significant “modifications that comply with applicable legal requirements.” The PRC approved rate changes for First Class Mail and other competitive products such as Express Mail, Priority Mail, Parcel Select, various service fees, etc. The USPS is authorized to move forward with those. However, the USPS has yet to indicate whether or not they will wait for the rejected rates to be corrected and approved before implementing the First Class Mail and other competitive products.

The USPS is required to give the mail industry a 45-day notice for rate changes. This notice allows software companies some time to re-program and test software prior to releasing updates to mail service providers. The time window is now closed for an April 26th implementation. There is legal controversy over the 45-day requirement, as to whether that applies based on when the rate case is filed, or when final rates are announced. Early indication is that the PRC is siding with the mail industry and believes that Congress intended the 45-day window to pertain to final announcement, which further weakens the USPS’ chances of any rate increases next month.

On March 12th, the USPS re-filed the Standard Mail, Periodicals and Package Services rates with the PRC, but the PRC has yet to issue a ruling or a timeline for these rates.

The earliest possible resolution and new rate implementation could occur in mid May.