The USPS has announced that it is considering some structural changes which could be part of a January 2017 postal price increase, dependent upon Postal Regulatory Commission (PRC) approval. These proposed structural changes include:
- Since the 2nd ounce rides free for First Class commercial letters was successful the past few years, the USPS is considering expanding that to include the 3rd ounce.
- For First and Standard Class letters, the 3-digit and AADC sortation rates are the same. The USPS is proposing combining these two categories into a single AADC sortation level.
- A change in the weight for piece/pound pricing breakpoint for Standard Class letters and flats from 3.3-ounces to 4-ounces. If this proves beneficial in adding pages or using heavier weight paper, the shift to a higher breakpoint could continue in future price changes.
- USPS data has shown that standard class dropship letters may be getting too much of a dropship discount. As a result, the USPS is looking to either increase letter prices above the CPI average or decrease the dropship discounts. This change would most likely happen over a number of years as opposed to all at once.
- Eliminate permit imprint application fees and annual mailing fees for the majority of mail classes. The same is proposed for Qualified Business Reply Mail (QBRM) and High Volume QBRM.
- Add additional/expanded promotions for 2017. One is to include Share Mail as part of the Earned Value promotion and the other supports a small business-based promotion.
In addition to structural changes, also expect the postage rates to increase. The USPS has indicated there will be a CPI (Consumer Price Index) increase on January 22, 2017. CPI has been trending at less than 1%. As budgets for 2017 are being finalized, it is safe to include an average 1% increase for postage. If you are a large volume standard class mailer, you may want to increase it more than the 1% based on the potential structural changes related to dropship discounts.
As you recall, the USPS decreased postage rates earlier this year. There is a bill that passed through committee in the House that could roll back half of this decrease – which would result in an increase of 2.15%. There is a slim chance of this legislation being passed by the House and Senate this year, but anything is possible. Mailers who want to budget conservatively, may want to add this 2.15% to the 1% CPI increase as a safeguard.