New Ruling Could Force USPS to Raise Rates on Competitive Products

A new ruling by the US Postal Regulatory Commission (PRC) could lead to higher shipping costs in 2019. Order No. 4963 was approved on January 3rd. The order says that United States Postal Service (USPS) Competitive products must contribute a greater percentage to its institutional costs, such as salaries, building maintenance, etc.

Competitive products are products over which the Postal Service doesn’t have sufficient market power and are competitive with other private shipping services. These include Priority Mail, Priority Mail Express, and First-Class Package Service.

Under the ruling the requirement for Competitive products for Fiscal 2019 will need to contribute 8.8%, up from last years 5.5%. The new ruling also require the appropriate share be updated annually. Until now the adjustment only came every five years. 

In an April filing with the PRC, the USPS warned that setting the minimum contribution too high could force artificial price increases to meet the new requirement.   

Amazon has come out in favor of lowering or eliminating the appropriate share. They believe it results in higher costs for consumers as other shipping companies raise prices to increase their profits. Other shipping companies like UPS see the matter differently. They felt the subsidizing of competitive products by the USPS distorts the market.

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