USPS Announces Proposed Postage Rate Increases
On May 28, 2021, the USPS announced postage increases. The price of a Forever Stamp will increase to 58 cents. This represents an increase of 5.45% and is less than the average increase for many other postage rates. The price of an extra ounce will remain unchanged at 20 cents. The surcharge for non-standard square-shaped cards will increase from 20 to 30 cents. Accordingly, the price for the Butterfly Stamp will rise to 88 cents. While increases in stamp prices are never welcome, we are pleased that the USPS has departed from its previous policy of raising Forever Stamp prices in nickel increments. This proved counter-productive and resulted in a reversal of a multi-year growth pattern in mailed greeting cards. We are glad the Board has recognized this and responded to the concerns we have shared with them.
There is much that GCA supports in the USPS 10-year “Delivering for America” plan. The commitment to 6 and 7-day mail delivery for mail and packages, support for consensus reform legislation, and optimization of delivery systems to ensure better performance and lower costs are all beneficial but all that good could be eroded if prices are raised too quickly and in a timeframe, the industry is not able to adapt to. The unusual mid-year increase is a cause for concern for the greeting card industry.
This timing is questionable given the state of USPS finances compared to its forecasting and the condition of the mailing industry as it emerges from the pandemic. The difference of a few months to permit the increase to go into effect in the normal January timeframe would cause no harm to the USPS because its revenues are running well ahead of projections but could have a depressing effect on mail volume as large mailers with fixed budgets will simply mail less. Historic trends suggest that mail volume once lost does not return.
The USPS 10-year plan indicated that it would pursue “judicious and prudent” strategies to optimize revenues. In briefings for the industry, Postmaster General DeJoy said that if USPS finances do better than the plan projects, increases would be mitigated since the plan rests on a break-even basis. According to the most recent figures, USPS operating revenue is more than $2 billion ahead of its projections so far this year. Simply put, the USPS did not need to raise prices now and risk losing volume.
Revenue is only part of the equation. Volume is also a critical consideration because it translates into more customers for the USPS down the line and a larger base to cover the institutional costs of the system. The 10-year plan predicts more than a 40% reduction in mail volume at the end of 10-years. We don’t think that that outcome is the best that can be achieved if USPS and the mailing industry work together effectively. We are confident there could be more greeting cards in the mail at the end of 10 years.
We are also looking to see if the USPS will take opportunities to improve its services to offset the impact of higher prices and service reductions. Simple changes like increasing the weight limit for a Single Piece letter as has already been done for Presort letters and eliminating the surcharge for a square envelope would be a prudent investment in the Single Piece First Class mail product that could increase the value and convenience for card senders within the confines of the 10-year plan. We look forward to working with the USPS to encourage consideration of these opportunities and to continue our cooperation in jointly encouraging the mailing of greeting cards.
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GCA Postal Affairs Committee
We engage with a variety of advocacy working groups, and have built a powerful coalition, all of whom are staunch supporters of maintaining the USPS as an independent entity, while also working to maintain six day mail delivery and identify cost-saving initiatives that help to maintain service quality and rate stability. We also support the current real price for single piece, First Class Mail.
Interested in serving as a member of this committee? Contact Rafe Morrissey, VP of Postal Affairs.