FedEx and UPS Rate Hikes Might Help the USPS

As covered in a previous post, the United States Postal Service (USPS) is set to implement rate increases on May 31, 2015  for its“Market Dominant Products” (Standard Mail, Periodicals, and Package Services). Pricing moves by the USPS always raise questions about whether customers will abandon the USPS and look for other alternatives. But an interesting infographic posted a few months ago by Endicia, a provider of ecommerce shipping technologies and services, illustrates how a survey of over 700 businesses indicates that rate increases by FedEx and UPS earlier this year might actually be driving customers to switch their shipping carrier to the USPS.

The Price Hikes are Coming!

Picture1In a development that hasn’t surprised any one, the Postal Regulatory Commission (PRC) has approved the most recent request by the USPS for price adjustments for what are cryptically called “Market Dominant Products.” This is USPS-speak for Standard Mail, Periodicals, and Package Services.

In two previous orders, the PRC remanded the price adjustments for these same services, citing non-compliance with applicable statutory and regulatory requirements.Apparently, the latest request complies with applicable statutory and regulatory requirements and the price requests will go into effect on May 31, 2015. The price adjustments were originally set for April 26, 2014 but were delayed by the PRC remands.

The new price list can be viewed on the Postal Explorer page underneath the 2015 Price Change Information heading.

Strike Three or Base Hit? The USPS Requests PRC for Approval of Rate Hikes Again

iStock_000004729406SmallAs noted in a previous post, the Postal Regulatory Commission (PRC) denied the United States Postal Service (USPS) March 18 request for rate changes on “market dominant products.” This was the second remand following the first on March 6th. But as of this week, the USPS has now filed a response to above-mentioned Postal Regulatory Commission (PRC) Order  in which the Commission remanded proposed rates for Standard Mail, Periodicals and Package Services (the “market dominant products”). The USPS response contains revised pricing and further explanation consistent with the Commission’s Order.

If approved, new pricing would go into effect on May 31, 2015.

This seems confusing at first, given the USPS announcement at the end of March that it was holding off on rate adjustments scheduled to take effect on April 26. But the rate adjustments being delayed were for First Class Mail, Special Services and Competitive Products. These have already been approved by the PRC. On the other hand, the PRC has twice rejected proposed rates changes affecting Standard Mail, Periodicals and Package Services, and this is what the USPS is seeking to get approved and implemented by May 31.

Global Mail Delivery Delays Update: April 7, 2015

World Map_standing imageHere are the current areas of the world that may be experiencing mail delays.

Source: International Delivery Solutions

France: Air traffic controllers throughout France will stage a 48-hour strike beginning on April 8th.

Scotland: Strike Announcement by Security Staff at Airports in Scotland. All airports run by government-owned Highlands and Islands Airports Ltd are to be hit by strikes after Easter. A 48 hour strike from midday on April 7th.

Spain:  Correos Spain informs that Trade Unions called a partial strike in all operations services at Correos Madrid April 1-5. As consequence all inbound and outbound processes could have been severely affected, not only services from/to MMadrid area.

United Arab Emirates: A sandstorm disrupted aviation operations on April 2nd.

Germany: April 1st union strikes by Verdi staff nationwide said Deutsche Post.

Turkey: Mar 31st, multiple provinces across Turkey including the cities of Ankara and Istanbul, experienced a power outage.

Argentina: Mar 31st transportation strike caused flight cancellations, domestic flights in Argentina as well as international routes.

India: Mar 30th severe flooding and landslides hit India’s Kashmir region.

Papua New Guinea: On Mar 30th, a 7.7 magnitude earthquake struck off the coast.

Update: USPS Remanded Again for Data, Billing Inconsistencies

On Wednesday, The Postal Regulatory Commission (PRC) denied the United States Postal Service’s request for rate changes on market dominant products.  This is the second remand.  The first occurred on March 6th.

We covered the first remand, which stated that the USPS didn’t meet several requirements and included errors and inconsistencies – many of which are required by title 39.  In order No. 2398, released on Wednesday, the PRC stated that “because the Postal Service has not complied fully with applicable statutory and regulatory requirements and Order No. 2378, the Commission remands the revised price adjustments set forth in the Response for further revision, correction, and clarification.”

The PRC’s second analysis still discovered several of the same discrepancies that were found in the first filing for rate changes.  The second remand focused on miscalculations in nonprofit and commercial pricing, the Flats Sequencing System (FSS), and other pricing issues.

In response to the PRC’s findings, the USPS does not plan to propose any price changes to Package Services.  Instead, the Postal Service plans to revise its Package Services price cap calculation.  According to Order No. 2378, the USPS calculates a revised Package Services total price adjustment of 1.947 percent.  As a reminder, this is less than the price cap of 1.966 percent.

The USPS has also filed a Special Weight Report that would address concerns around the FSS.  The USPS has until March 25th to make the PRC’s suggested changes.

More information on the second USPS remand can be found here.

USPS Proposal for Price Adjustments Deemed Incomplete by Postal Regulatory Commission

Click the photo above to be taken to the official announcement of remand on the PRC's website.

Click the photo above to be taken to the official announcement of remand on the PRC’s website.

In January, the USPS filed noticed of a planned price adjustment for market dominant products.  Today, the Postal Regulatory Commission (PRC) announced that they will not honor the requested price increases until the USPS modifies their request.

In Docket No. R2015-4, the PRC highlighted several reasons for their remand:

  • As currently proposed, prices for the Standard Mail, Periodicals, and Package Services classes do not comply with certain statutory and regulatory requirements and are therefore remanded to the Postal Service for further action.
  • The unequal commercial and nonprofit discounts in the Standard Mail class violate the requirement that disparities between commercial and nonprofit discounts must be justified.
  • The Postal Service did not provide a justification for the proposed unequal nonprofit and commercial dropship discounts.
  • Standard Mail workshare discounts exceed 100 percent and have not been adequately justified.
  • The USPS incorrectly adjusted several billing determinants associated with Flats Sequencing System (FSS) prices for Periodicals bundles, sacks, and pallets and failed to provide the Commission with the data necessary to calculate the actual average price increase for the Periodicals class.
  • The Postal Service’s initial filing in this proceeding contained many errors and inconsistencies and lacked information required by title 39 and the Commission’s regulations.

Because of their findings, the Commission determined that the USPS proposal was “incomplete with respect to the price adjustments related to Standard Mail, Periodicals, Package Services, and Special Services.”  If the USPS “complete[s] responses to certain information requests, the Notice would be complete and the 45-day notice period would begin for price adjustments related to the affected classes of mail.”

Specific information on the Commission’s findings above, including explanations for each of their remands, can be read in Docket R2015-4.

New Postmaster General to Focus on Growth

Postmaster_MB

Megan Brennan was recently announced as the 74th USPS Postmaster General and CEO.

Earlier this month, Megan J. Brennan was formally introduced as the 74th Postmaster General and CEO of the USPS.  In a letter to her colleagues, she outlined her plan for long term success.

“I firmly believe that our future is filled with opportunity, not just through the prism of winning customers and growing our business, but also from the perspective of enhancing our brand and the value we provide to the American public,” Brennan said.  “We can reinvigorate the way we serve our customers and the public by constantly looking forward as an organization, anticipating the changing needs of our customers, and adapting as quickly as we can to a competitive and evolving marketplace.”

While shipping and package volume rose 12.8 percent and standard mail volume increase 3.5 percent in quarter 1 (Q1), the USPS still suffered a $754 million Q1 net loss.  In a recent press release, Brennan added that the organization will focus on the momentum of success by continuing to expand solutions and service.

“Our employees delivered double-digit growth in packages this holiday season, which shows our growing ability to compete for and win new package delivery customers,” Brennan said.

Brennan succeeds Postmaster General Patrick Donahoe, who announced his retirement last year.  His final speech was delivered to the Nation Press Club last month.

Specific Q1 financial information is available on the USPS website.  More information on Postmaster General Megan Brennan can be found here.