Postal rates would rise by an overall average 1.9 percent next year under a proposal filed by the United States Postal Service (USPS) but some classes of nonprofit mail might get double-digit hikes.
The USPS filed notice with the Postal Regulatory Commission (PRC) for an increase that would take effect Jan. 26, 2020. There would be no increase in first class letters, which jumped from 50 to 55 cents this past January, or other classes typically used by consumers.
Average percentage changes by class are proposed as:
- First Class, 1.919 percent
- Marketing Mail, 1.891 percent
- Periodicals, 1.9 percent
- Package Services, 1.892 percent
- Special Services, 1.905 percent
Rate increases for different levels of drop-shipping the past few years have outpaced the rate of inflation, reducing the incentives, said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers. A lot of larger nonprofits drop ship virtually all of their mail, he said, adding that the proposed rates get back to some more “normalcy” and keeping within the rate of inflation.
The proposed increases, at first blush, follow what Kearney preaches should be the attitude for USPS around rate increases: first, do no harm. As expected, first-class letter postage remains unchanged after this year’s 10-percent hike to 55 cents. The overall 1.9 percent average increase is pretty reasonable and the lowest in three years, he said.
Still, a lot of charities want to stay in the mail but have fixed budgets on publications. If revenue is not growing enough, amid concerns about the declining number of donors and contributions this year, Kearney said rate increases could force some nonprofits to cut back on mailings – even if they’d rather not.
Rate changes vary within each class by categories. Marketing Mail would see rate increases ranging from zero to 13.5 percent (5-digit Piece Rate) for nonprofit regular automation classes and zero to 23.8 percent (5-Digit Piece Rate) among classes within non-automation, according to calculations by the Alliance of Nonprofit Mailers (ANM). Categories within nonprofit enhanced carrier route would see very few rate hikes but those that would increase were as much as 4.8 percent.
The proposed 1.891 percent increase for Marketing Mail breaks downs as follows:
- Letters, 1.961 percent
- Flats, 3.908 percent
- Parcels, 3.913 percent
- High Density / Saturation Letters, 1.408 percent
- High Density / Saturation Flats and Parcels, 0.868 percent
- Carrier Route, 1.136 percent
- Every Door Direct Mail – Retail, 2.139 percent
The PRC recently directed USPS to “raise Flats rates at least 2 percentage points above the Marketing Mail class average, and strongly recommended the same for Parcels,” according to the 169-page notice filed with the PRC.
The price cap calculation is based on the change in the Consumer Price Index (CPI-U). The 12-month moving average was 1.9 percent, for the 12 months ending in August, declining each month since a high of 2.463 percent in October 2018.
The proposed prices are approved by the USPS Board of Governors and now go to the PRC for review and approval. The board believes that the new rate “will keep the Postal Service competitive while providing the agency with needed revenue,” according to a press release from the USPS.
Nonprofit drop-shipped Marketing Mail letters will not see increases higher than inflation as occurred in the last three years, according to the alliance. SCF would rise by 1.82 percent and NDC by 1.72 percent. Origin will be unchanged and Mixed Origin would go up by 2.89 percent.
Last month, the U.S. Court of Appeals for Washington D.C. ruled that First Class price increases in January did not follow the proper procedure under the law. USPS is expected to appeal the decision.