The Postal Price Correction: New rate structure rewards automation-friendly mail
By now, unless you’ve been on a desert island for the past month, you’ve probably heard about the impending postal rate change, which represents a complete restructuring of the way the U.S. Postal Service determines rates. For the first time ever, the rate structure will consider an item’s shape in addition to its weight, reflecting the fact that certain types of mail require higher processing costs, and it passes those costs back to customers.
The USPS has come a long way since 1775, when Benjamin Franklin implemented a national postal system. But many of the changes have been relatively recent. For instance, it wasn’t until July 1971 that the Post Office Department evolved into the modern USPS. The Postal Reorganization Act gave the new entity independent operational authority and a new rate-setting procedure governed by a Postal Rate Commission (PRC). The act empowered the PRC to recommend postal rates and mail classifications for adoption by the newly formed Board of Governors and required that rates for each mail class cover direct and indirect costs.
Since then, the USPS has raised first-class postage 13 times, including the rate hike of last January. Each time, the new rates considered only weight. Under the current system, a three-ounce letter, flat or parcel costs the same to mail for the consumer – but not for the USPS.