on Oct 31st, 2011
in Pricing & Rates
| 12 comments
When mailing a letter that weighs about one ounce, the U.S. Postal Service’s 44 cents is one of lowest First Class postage rates. Whether you are mailing a letter locally or sending a greeting card across country, it still only costs 44 cents now, but will increase to 45 cents in January. The graph below compares the U.S. Postal Service’s postage rate with other countries. As you can see, Norway charges the highest rate, which is nearly four times the cost U.S. rate.
on Jun 20th, 2011
in Pricing & Rates
| 7 comments
Offering volume incentives is a common business practice in the U.S. and around the world. Although the U.S. Postal Service offers incentives to businesses that presort their mail, the agency does not offer incentives based strictly on the volume of packages shipped. One reason might be that offering volume incentives would lower the profit margin on each package shipped; yet, the potential volume increase of items shipped would make up for the smaller profit margins. E-retail is a multibillion-dollar industry through which millions of transactions are made via clearinghouses, such as Amazon.com and eBay. The e-retail industry continues to grow and includes on-line sales in virtually every industry. In the U.S., online retail spending for the Q4 2010 reached a record $43.4 billion, up from $39.0 billion in Q4 2009. This accelerated growth rate represented the fifth consecutive quarter of positive year-over-year growth and second quarter of double-digit growth rates in the past year. This trend will likely continue as more online people turn to the internet for their shopping needs, and younger, digital-savvy generations increasingly flex their spending power. Companies like eBay, Amazon.com, and traditional retailers with strong web operations should continue to benefit from this growth. Increases in e-shopping means an increase in the quantity of goods shipped is also increasing. Most vendors have their preferences, which are frequently based on cost. Should the Postal Service take advantage of the increased amount of shipping generated by e-retailers by offering incentives? Yes or no, and why? This blog is hosted by the Office of Audit’s Financial Reporting Directorate.
on Jul 7th, 2010
in Pricing & Rates
| 13 comments
The Postal Accountability and Enhancement Act of 2006 (PAEA) ushered in a new regulatory structure for the U.S. Postal Service. One key element was a price cap on market dominant products. (Most of the Postal Service's products are market dominant.) This means that price increases for market dominant products are capped by the rate of inflation as measured by the Consumer Price Index (CPI). PAEA, however, does allow the Postal Service to increase its prices beyond the CPI cap under “extraordinary and exceptional circumstances.” The Postal Service makes the exception by filing an ‘exigent’ rate case to the Postal Regulatory Commission (PRC). Before the Postal Service can increase prices, the PRC must agree with the ‘exigent’ request and find it to be reasonable, equitable, and necessary.
This week the Postal Service proposed an exigent rate increase, an average of 5.6 percent across all classes of mail, effective January 2011. The direct mail industry has challenged the increase, threatening legal action and warning that the Postal Service will suffer large drops in mail volume. Much of the industry’s objection has centered on whether the Postal Service’s current circumstances are really “extraordinary and exceptional.” The Postal Service has based its case on the significant decline in mail volume and revenue, caused by the economic recession. In addition, because inflation has been low, the Postal Service has a small margin under the cap to raise prices. Some might argue that a price cap based on consumer items such as food, apparel, and electronics might not be the best metric for the Postal Service, because its costs are based on fuel, salaries, and health benefits. What do you think of the exigent price increase? Is it important to the continued viability of the Postal Service or should other revenue and cost reduction opportunities be explored first? This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
This site provides a forum to discuss different aspects of the United States Postal Service and how it can be improved. We encourage you to share your comments, ideas, and concerns.
This is a moderated site—we will review all comments before posting them. We expect that participants will treat each other with respect. We will not post comments that contain vulgar language, personal attacks of any kind, or offensive terms that target specific individuals or groups. We will not post comments that are clearly off-topic or that promote services or products. Comments that make unsupported accusations will also not be posted.
We ask that reporters send questions to the USPS OIG Media Office through their normal channels and refrain from submitting questions here as comments. We will not post questions from reporters.
We recognize that the Web is a 24/7 medium, and your comments are welcome at any time. Given the need to manage Federal resources effectively, however, we will review comments and post them from 9:00 a.m—5:00 p.m Eastern Time, Monday through Friday. We will read and post comments submitted after hours, on weekends, or on holidays as early as possible the next business day.
To protect your own privacy, and the privacy of others, please do not include personal information or personally identifiable information such as names, addresses, phone numbers or e-mail addresses in the body of your comment.
Except when specifically noted, any views or opinions expressed on this forum (or any other forums available via an RSS feed) are those of the individual bloggers. The views and posted comments do not necessarily reflect those of the U.S. Postal Service Office of Inspector General, or the Federal government.
Thank you for taking the time to read this comment policy and disclaimer. We plan to blog weekly on as many emerging new media topics as possible. We encourage your participation in our discussion and look forward to an active exchange of ideas.