• on Aug 20th, 2012 in Pricing & Rates | 5 comments
    Since the beginning of the Post Office and the Postal Act of 1792, certain types of mail have qualified for lower postage through preferred rates. It was assumed that these types of mailings yield social benefits for senders, recipients, and more importantly, a large nation. Preferred rates’ roots trace to the first federal postal policy, which recognized that disseminating newspapers at below-cost postage would advance the important social goal of educating the electorate. Soon after, magazines received special rates. For its first 50 years, the Post Office was predominantly a newspaper circulation service, because of the high cost of sending letter mail. (Sending a one-sheet letter 500 miles cost 25 cents, while sending a newspaper that distance cost only 1½ cents.) As the Post Office evolved over the next century, so too did the rates it charged for various types of mail. Regular letter mail rates were lowered to be more in line with the newspaper rate. Still, Congress considered a preferred rate for socially important mail to be so crucial it extended eligibility to more types of mail. A class structure was introduced to organize the types of mail. In 1894, Congress allowed nonprofit organizations to send their publications at second-class rates, the rates for newspapers and magazines. That statutory language evolved to create the nonprofit subclass in Second Class, a class now known as Periodicals. In the late 1920s, Congress added Library Mail as a preferred rate for mail sent to or from libraries. In the 1930s, President Roosevelt created a preferred rate for all books that is now known as Media Mail. In 1951, after 2 years of deliberation and strong appeals by charities and philanthropic groups, Congress created a nonprofit subclass in Third Class, today’s Standard Mail. When all of these preferred rates were established, congressional appropriations funded the Postal Service’s operations. And even until 1993, Congress appropriated funds to reimburse the Postal Service for revenues it lost by providing below-cost rates for certain types of preferred mail. Today, the Postal Service receives only a small appropriation for free mail for the blind and overseas voting. All other costs are borne by mailers. At times, Congress has reconsidered the public policy benefits of preferred mail in light of the potential for abuse and in consideration of the Postal Service’s financial condition. As we again dive into reform of the Postal Service, is it time to reconsider the modern application of preferred postage rates? Since the Postal Service uses revenues from postage to fund operations, can it afford to offer some types of mailings reduced postage through preferred rates? Or, does the nation continue to benefit when certain types of mail qualify for preferred rates? How should preferred categories be selected? Do you agree with the current categories or should other types of mail qualify for preferred rates?
  • on Apr 23rd, 2012 in Post Offices & Retail Network, Pricing & Rates | 9 comments
    Generally, most consumers know the rates for mailing a 1-ounce First-Class® letter. However, many don’t know the prices of other postal service offerings, such as certification, insurance, or return receipt. In some instances, some of these services must be bundled with the mailing type. Posting the rates for the more commonly used services in a convenient spot in the Post Offices would let customers know approximately how much services cost, allowing them to make informed decisions. For example, displaying rates for the first several ounce increments of First-Class mail, as well as the most commonly used rates for Express Mail and Priority Mail along with the rates for certification, insurance, and return receipt, would help mailers calculate the total purchase price. Easy access to this information would allow mailers to effortlessly make price comparisons with other providers and clearly reveal the true value the Postal Service provides to consumers. What do you think? How can the Postal Service present prices in the most effective way?

    This blog is hosted by the Financial Reporting directorate.

  • on Nov 28th, 2011 in Pricing & Rates | 14 comments
    Have you ever heard of Alaska Bypass? It’s a service the U.S. Postal Service offers only in Alaska, allowing shippers to send shrink-wrapped pallets of goods at Parcel Post rates using private airlines. The Postal Service pays airlines to carry the goods to rural Alaskan communities by delivering these goods directly to the stores located in rural areas. The shippers effectively and entirely “bypass” the Postal Service’s delivery network. The Postal Service has to pay the airlines much more than it receives in postage for this program. In FY 2010, the Postal Service lost $73 million on Alaska Bypass. In addition, the people receiving the shipments are usually retail merchants, because the orders must be at least 1,000 pounds. The Postal Service doesn’t provide this kind of service for retailers anywhere else in the country. Alaska Bypass began when it was much more difficult to get goods to rural Alaskans than it is today. There are even some that say it no longer seems to fit with the Postal Service’s mission. The Office of Inspector General Risk Analysis Research Center has developed a white paper, Alaska Bypass: Beyond Its Original Purpose, which outlines the history of the program and the shift away from its original purpose. The paper offers various options to improve the program. Should the Postal Service continue to pay for sending large shipments of goods to retailers and be permitted to charge the shippers more for this service? Should the 1,000-pound minimum order requirement, targeted to retailers, be eliminated in order to extend the benefit directly to consumers shopping online? What do you think? Click here to read the white paper and we invite you to share your thoughts about this program on our blog. This blog is hosted by the OIG’s Risk Analysis Research Center.

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