Dear Industry Executive:
The USPS on January 15th filed for a CPI-capped rate postage increase, as we had expected and reported previously. Upon Postal Regulatory Commission (PRC) approval, new rates will be implemented on April 26, 2015. We will be analyzing the full filing, but for now here are the highlights:
- The rate change will cover all market dominant products and will use the current CPI cap of 1.966% plus the 4.3% exigent surcharge (i.e., the surcharge remains in place plus the additional increase).
- Note that the US Court of Appeals is expected to rule on the exigent matter any time now. The ruling could modify what actually happens in April.
- As part of a three-year plan to account for ‘underwater’ postal products, rates for Standard Flats will increase 2.465% (CPI x 1.254%) to address PRC concerns we have previously reported on.
- Carrier Route Standard Mail will increase 1.415%.
- The filing is expected to generate an additional $900 million in revenues on an annualized basis, some $400 million of which will be realized in FY 2015.
- The rate adjustment request will also include four promotional offerings, some or all of which may be applicable to catalogs.
- A Flats Sequencing System (FSS) pricing structure will also be offered. We have been told the USPS took into account a significant amount of input mailers have offered on an FSS rate design.
We will provide you with our complete assessment soon.