January 30, 2018

Is This the End of Routine Rate Changes?

A week ago, the latest annual price change by the Postal Service went into effect, smoothly and with little notice. What use to be a big deal, attracting extensive notice by the media, large mailers, and the general public, now is routine. For that we can mainly thank the 2006 postal law change that put the Consumer Price Index (CPI) cap and annual price changes in place.

The predictability and somewhat straightforward nature of postal price changes is threatened by the misguided proposal by the Postal Regulatory Commission to overly complicate and greatly inflate the CPI cap. It would add as many as four more rate increases on top of the general inflation rate.  And the proposal would increase rates as much as 7 percent a year for the next five years at least, compounding to 40 percent.

For now, enjoy the routine nature of the latest change. And use the excellent Price List Notice 123, available here at Postal Explorer, that the USPS publishes to summarize very clearly every set of new rates.

We all could be looking back nostalgically on the decade in which postal rates were predictable and manageable. And a time when the USPS and the PRC navigated the great recession and extensive diversion of volume with mostly operating profits, aside from phantom losses caused by a misguided retirement pre-funding scheme. In fact, 90 percent of the losses reported by USPS in the last decade have been “paper” losses caused by the artificial pre-funding mandate that the Postal Service rightfully stopped making.

Could this be the end of routine predictability?