The Good and the Bad of the USPS Rate Case
April 25, 2024   Dave Lewis

The Postal Service put forward one of the most complex rate cases in recent memory with the current case, due to take effect on July 14, 2024. The highlights are well-known:  An overall increase of about 7.8%, with a First-Class Forever Stamp going to $.73. As usual, the devil is in the details…and there are a few angels in there, too.

Overall, commercial Marketing Mail went up 7.9%, with big variations between different densities and piece sizes. Marketing Mail flats were up 10.2% overall, although “overall” may not have a lot of meaning in this case.

Nonprofit mail was actually treated more gently, with an overall increase of about 5.7%. The base rates went up even less, but changes in destination discounts had a bad effect.

A great deal of the letter mail we see is commingled. Commingling companies can generally combine the mail of several customers and sort the mail down to a 5-digit rate, which saves postage. Then, they will generally drop ship mail to SCFs across the country, earning a discount for that. So, for a typical nonprofit letter in a small mailing (let’s say 10,000 pieces) entered at the local post office, your postage would probably average about $.21 each, at today’s rates. By commingling and drop shipping your mail, the postage rate paid by the commingler drops to about $.14. The seven cent postage savings pays for the commingler’s operations and trucking the mail and, hopefully, a little profit. The price you pay the commingler will fall somewhere in between. The price you pay is negotiated.

Under the new rates, that same mailing, entered locally again, your postage will only go up a touch, to just over $.21 per piece. But the commingler’s discounted rate will now be about $.15 per piece, so you now only have six cents to work with. At the same time, the commingler’s cost for labor and trucking have risen. Most commingling companies work on a small margin, so expect to see your postage impacted.

 There are also many small incentives added that can impact price:

  • If you’re mailing commercial Marketing Mail flats, there is a $.031 discount for certain carrier route flats entered at the destination SCF.
  • The incentive for Full-Service IMb mail was increased from $.003 to $.005. Don’t laugh – it’s $2.00/M.
  • The Seamless incentive was also increased by $.001 – another buck a thousand.
  • The price for an additional ounce for First-Class mail rose from $.24 to $.28. That is only for single-piece First-Class. Presorted and automated will continue to include 3.5 ounces in the lowest rate tier.
  • As in previous years, there are a lot of promotions of which you can take advantage. See the other article for details.
  • The mail growth incentive programs will stay in effect too.
  • Mailing catalogs? Just check a box on your eDocs, and get $1.00/M, just because.

How much will your mail cost after the rates change in July? As you can see, it depends. Start working with your mail service provider today to run your numbers with the new rates. Make sure your vendors participate in Full-Service Intelligent Mail and Seamless Acceptance.

Please note a couple of things:

  • Thing OneThese rates are only proposed, although they are likely to go through the PRC unaltered.
  • Thing Two:   I’ve only noted the tiniest tip of the rate-change iceberg here. There are more than 30 pages in the official proposed postage rates.  Want to read those 30 pages yourself? Click here

Finally, according to industry experts everywhere, SnailWorks remains the best value in mailing.