The U.S. Postal Service is expected to raise prices in July, raising the cost of a Forever stamp from 58 cents to 60 cents. And that might not be the only price hike in the near future.
Postmaster General Louis DeJoy said May 5 that he expects the Postal Service to continue raising prices “at an uncomfortable rate” until the agency becomes self-sufficient.
The USPS proposed the rate increase a month ago, on April 6, the same day President Biden signed the Postal Service Reform Act of 2022, legislation intended to strengthen the agency, which faced financial challenges as well as fierce competition from shippers such as FedEx and UPS.
In addition to ensuring mail delivery six days a week, the new law is expected to save the agency about $50 billion over the next decade, DeJoy said. This primarily comes from the end of the USPS requirement to contribute to a health benefit fund for current and retired employees for 75 years. Retired postal workers must now enroll in Medicare.
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But the new law alone will not bring solvency to the agency, which has suffered 14 straight years of net losses. The USPS still expects to lose $110 billion over the next 10 years, DeJoy said at a meeting of the Postal Service’s Board of Governors.
Further price increases are necessary, DeJoy said, “until we have achieved our goal of projecting a trajectory that shows we are becoming self-sufficient — as required by law.”
USPS mail prices expected to rise
The US Postal Service has proposed the following price increases which will take effect on July 10.
Product Current prices Expected prices
- Letters (1 oz.) 58 cents 60 cents
- Letters (by the 1 oz. meter) 53 cents 57 cents
- Letters extra ounce(s) 20 cents 24 cents
- National Postcards 40 cents 44 cents
- International letter (1 oz) $1.30 $1.40
The Postal Regulatory Commission is reviewing the price hike and is expected to approve it, said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers, which estimates that nonprofits account for around 10% of all mail volume. USPS.
The PRC did not return a request for comment.
The last Forever stamp price hike was in August 2021, when the USPS raised the price by three cents to 58 cents.
What other USPS prices have gone up?
Earlier this year, USPS raised rates on Priority Mail and Priority Mail Express by 2.7% (rates from $7.37, up from $7.16) and 4.3% (from 23, $50, previously $22.75).
Will there be more USPS price increases?
Postmaster General DeJoy said they were needed.
The Postal Service will likely seek another 3% to 5% price increase in January, but Kearney’s organization opposes current and future ones.
The Alliance of Nonprofit Mailers, along with the Association for Postal Commerce, last month asked the Postal Regulatory Commission to reconsider the USPS’s leeway to raise rates. “They don’t need these excessive rate hikes now,” Kearney said.
Does the USPS need this price hike?
Members of Congress diverge. Before approving the rate increase, the Postal Regulatory Commission should consider how the passage of postal reform legislation has changed the financial position of the USPS, said Rep. Carolyn Maloney, DN.Y., who chairs the House Oversight Committee.
A member of that committee, Rep. Gerry Connolly, D-Va., agrees. “Postmaster DeJoy’s plan to raise prices while degrading service is a recipe for disaster,” he said in a statement to USA TODAY. “We have just passed postal reform to restore financial stability to the postal service. We cannot undo this progress by making prices uncompetitive.”
Connolly is referring to concerns about changing standards for first-class mail delivery times that went into effect October 1, 2021. Now the USPS has a four- or five-day standard for mail traveling 931 miles or more. In the past, the agency’s standard was to deliver all first-class mail within three days.
But most first-class mail (61%) and periodicals (93%) won’t be affected by these changes, while one-piece first-class mail in a local area will still arrive in two days, according to USPS. . Overall, 70% of first class mail volume should arrive within 1-3 days.
“The Postal Service will increase transit time standards by 1 or 2 days for certain mail that travels longer distances,” USPS spokesman David Coleman said. “By doing so, the Postal Service can outsource the delivery of more (first-class mail) to its ground network, which will lead to greater consistency, reliability and efficiency for the benefit of its customers.”
The concern is that “when the Postal Service slows down, people use the mail less,” said Porter McConnell, co-founder of the Save the Post Office Coalition.
Lower volumes — and competitive pricing — are factored into the agency’s 10-year strategic plan, announced in March 2021 by DeJoy. The USPS rate hike also takes inflation into account, said Rep. James Comer, R-Ky., the ranking Republican on the committee.
“The Postal Service has to operate like a business to be financially viable,” he told USA TODAY. “A key part of the recently passed Postal Reform Bill was to allow the Postal Service — not Congress — to make business decisions.”
Instead of increasing rates, the Postal Service should take advantage of the capabilities allowed by the reform law to partner with local and state agencies to provide services such as hunting and fishing licenses, provide service to Broadband — or even a Wi-Fi signal in the parking lot — electric vehicle charging and grocery delivery, McConnell said. “Other government agencies often partner with the private sector to expand their presence, but no one has more reach than the USPS,” she said.
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New USPS trucks still in question
Postage rates and delivery times aren’t the only issues facing the Postal Service. The agency has received backlash for its plan to replace its fleet of delivery trucks. The Environmental Protection Agency and Democratic lawmakers have argued that the plan involves buying too many gas-powered vehicles and too few electric vehicles.
The Postal Service said it will manufacture 20% of its new battery-powered vehicles as part of the initial $2.98 billion order for 50,000 vehicles. It plans to purchase up to 165,000 new trucks.
But earlier this week, Oversight Chairman Maloney sent a letter to DeJoy requesting documents about the environmental analysis used by the USPS in its decision. “I fear the Postal Service has relied on faulty assumptions to justify buying gas-powered trucks while underestimating the cost savings and environmental benefits of electric vehicles,” Maloney wrote.
This follows Government Accountability Office testimony at an April House hearing that a Postal Service analysis used to justify its purchase plan was flawed, overestimating the costs of maintaining electric vehicles and underestimating -estimating gasoline prices. Meanwhile, 16 states, including California and New York, have filed a lawsuit to force the Postal Service to conduct a more thorough environmental review before making purchases.
Regardless of those issues, DeJoy has done a good job setting up the Postal Service for long-term success, said Gaston Curk of OSM Worldwide. The shipping line, headquartered near Chicago, partners with USPS for last-mile delivery.
“The Post’s viability is strong,” he said. “It’s just going to take a few years to really get him back into the shape we need.”
But there may be short-term difficulties for USPS customers. “Inflation and oil prices really have a huge effect (on the Postal Service),” Curk said. “Until this stabilizes, I think we’re going to see some pretty unfortunate, but healthy, postage increases.”
Contribute: The Associated Press
Follow Mike Snider on Twitter: @mikesnider.