U.S. Postal Service approves May rate increase

The Governors of the U.S. Postal Service on March 19 approved a rate increase, the service’s third increase in five years.

Under the new rate structure, set to take effect May 14, postage to send a first-class envelope increases to 41 cents from 39 cents, while the cost for each additional ounce decreases to 17 cents from 24 cents.

Other mailing rates are increasing as well – postcards will cost 26 cents, up from 24 cents, and a 1-pound package sent parcel post increases to $4.50 from $3.95.

Dave Partenheimer, spokesman for the postal service, said the increase is actually the first rate hike based on operational needs since 2002; the rate increase that took effect on Jan. 1, 2006, was solely to fund an escrow account required by a new federal law.

Partenheimer pointed to two factors as the main reason for the need to increase rates.

“We have a very large fleet of delivery vehicles from our processing plants and post offices. With fuel prices going up again, we had to increase prices,” he said. “Another issue is employee health costs – like most businesses, those costs are going up.”

One of the biggest impacts for businesses could come from the postal service’s new “shape-based pricing” system. The system measures mail not only based on weight but also on dimensions and thickness.

Those new requirements could dramatically increase postage costs for some businesses, according to Dennis Dawson, director of sales for mailing systems supplier Addtronics Business Systems.

One example Dawson cites: A 2-ounce standard business envelope under the new system will cost 58 cents, but if that envelope is more than 1/4-inch thick, it will be classified as a flat, costing 97 cents, a 67 percent increase. If that envelope is more than 3/4-inch thick, it’s classified as a parcel, which will cost $1.30.

Dawson said the changes will require some companies to find ways to mail smaller, thinner packages.

“The more people can go to smaller mailing solutions, the more money they’ll be able to save,” Dawson said. “It’s going to be a totally different way of doing mail.”

Missouri State University is one organization that will surely see the effects of the new rates – the university mailed 5 million pieces in 2006.

Wanda Sillyman, the university’s postal services supervisor, said it’s unknown at this point what the effect will be on university costs.

“That’s what we’re dealing with right now – depending on the size of the flat, some of the letters in the past could be flats now, and some of the flats could be parcels,” she said. “We’ve tried to pinpoint it, but we haven’t gotten very far.”

Aside from increasing costs, part of the rate increase’s purpose is to encourage businesses to do some of the sorting work themselves. Presorted mail rates are at least 10 percent less than their unsorted counterpart.

“If (businesses) can reshape their mail in a way that helps speed up our processing efforts and saves us money – if something can be moved from a parcel to a large envelope – those savings are passed on to the customer,” Partenheimer said.

New postage rates

Single-piece (first ounce)

Letters: 41 cents

Flats: 80 cents

Parcels: $1.13

Additional ounces: 17 cents each

Presorted mail (first ounce)

Letters: 37.3 cents

Flats: 69.9 cents

Additional ounces: 17 cents

Postcards

Single: 26 cents

Presorted: 24 cents

Priority Mail

Envelopes: $4.60

Boxes: $9.15

Parcel Post (up to 1 pound): $4.50