February 25, 2025

Issue 25/02

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The Alliance of Nonprofit Mailers is a 501 (c)(4) nonprofit organization established by nonprofits for nonprofits.

PRC rules that USPS can claw back volume incentive discounts in the next general rate hikes

Last week the Postal Regulatory Commission gave the Postal Service the green light to include the impact of the volume growth incentives promotion in the general rate increases planned for this July. This claw-back is something USPS fought long and hard for. As we have reported earlier the volume discounts will allow estimated additional rate increases of 2.3% for Marketing Mail and 0.6% for First-Class Mail above the regulatory rate authority.

On February 12, we provided our estimates for the regulatory rate authority as follows:

There will be one more CPI release on March 12 to finalize that component of the rate authority.

While the PRC did not allow volume incentives to be considered “rates of general applicability” it approved new criteria that will allow the volume incentives to slip into the general rate calculations.

We can see in the regulator’s definition that the USPS volume incentive discounts are not rates of general applicability:

Rate of general applicability means a rate applicable to all mail meeting standards established by the Mail Classification Schedule, the Domestic Mail Manual, and the International Mail Manual. A rate is not a rate of general applicability if eligibility for the rate is dependent on factors other than the characteristics of the mail to which the rate applies. A rate incentive is not a rate of general applicability if eligibility for the rate is wholly or partially dependent on the volume of mail sent by a mailer in a past year or years or on the participation by a mailer in a rate incentive or promotion in a past year or years. A rate is not a rate of general applicability if it benefits only a single mailer. A rate that is only available upon the written agreement of both the Postal Service and a mailer, a group of mailers, or a foreign postal operator is not a rate of general applicability.

The criteria set up by the PRC to allow volume incentives to impact general rates are:

A rate incentive may be included in a percentage change in rates calculation

if it meets the following criteria:

(i) The rate incentive is in the form of a discount or can be easily translated into

a discount;

(ii) Sufficient billing determinants are available for the rate incentive to be

included in the percentage change in rate calculation for the class, which may be

adjusted based on known mail characteristics or historical volume data (as opposed to forecasts of mailer behavior); and

(iii) The rate incentive is either:

(A) A rate of general applicability; or

(B) A rate not of general applicability that satisfies the following requirements:

(1) The rate incentive is not only available upon the written agreement of both

the Postal Service and a mailer, or group of mailers, or a foreign postal operator;

(2) The rate incentive is applicable to all mail meeting standards established by

the Mail Classification Schedule, the Domestic Mail Manual, and the International Mail Manual;

(3) The rate incentive does not benefit only a single mailer;

(4) The rate incentive is designed to increase volume; and

(5) A mailer’s eligibility for the rate incentive depends on the mailer’s sending, in a specified period of time, a volume of mail of specified products that exceeds a specified threshold volume of mail, provided that such threshold volume of mail is not less than the volume of the specified products that the mailer sent in the rate incentive comparison period.

As the dust settles on a 38-page ruling, the reality hitting mailers is consistent with our warning several weeks ago. The rate increases on Market Dominant Mail expected in July 2025 will be quite large due to 12 months of inflation plus two regulatory add-ons plus the impact of the volume incentive promotion.

• Marketing Mail rates will go up in the range of 9.7% to 11.7%, with some possibly higher.
• First-Class Mail prices will increase by an average of 8%.
• Periodicals are not affected by the promotions so they will increase in price by 9.4% on average.
• The First-Class stamp rate could go from 73 cents to 79 cents, or more likely 80 cents as USPS prefers round numbers.

Large USPS losses resume in January, wiping out the benefits of the election; packages continue to disappoint

In January, United States Postal Service Market Dominant mail volume dropped 6.2% while packages fell 8.1%. Without the workers’ compensation adjustment, the agency lost $610 million in January.

Operating revenue missed plan by 4.8% bringing the year-to-date (YTD) shortfall to 2%.

Competitive packages continued to disappoint in January, missing planned volume by 12.8%.

As the election gains have been offset, mail volume is flat YTD. Packages are not compensating for mail loss as their volume is down 2.1% YTD. Total volume is off 0.2% YTD.

After removing non-cash workers’ compensation, USPS’s year-to-date net loss through January is $1.1 billion, compared to a plan of $839 million and SPLY of $1.4 billion. The planned loss for the year (which also doesn’t include non-cash workers’ compensation) is $6.9 billion.

Both monthly and YTD USPS financial results are getting worse by the month so far in FY 2025.

Canada Post strike during the holiday season cost nonprofits a net $266 million in lost donations

Analysis by CanadaHelps shows that charities lost a net $266 million in donations during the Canada Post strike this past holiday season. According to a news release, “Using models developed by CanadaHelps, charities would have expected $396 million in donations via direct mail during the period from November 16 to December 31, had there been no strike. Charities likely raised an estimated $130 million in additional online donations beyond normal expectations, due to the impact of the strike.”

This result is not surprising given the reliance on mail that many nonprofits continue to experience. Canada’s population is 12% of the U.S., so we can imagine what the impact of losing mail service would be in our nation. Instead of a strike, many nonprofits are enduring something akin to “death by a thousand cuts” as repeated above-inflation rate increases have reduced their ability to afford postal mail.

The prospect of rate increases ranging from 10% to 12% or more in July threatens to continue the forced reduction in funds raised and services offered by our charities.