Some good news for the U.S. Postal Service for a change …

psThe U.S. Postal Service has just implemented a price adjustment on first class letter mail – the first rate increase in quite a few years. Some other pricing adjustments have been implemented as well, but on the whole they are modest.

Hopefully the rate increases won’t throw water on the good news that the USPS experienced over the holiday season. According to a Rasmussen Reports consumer survey of ~1,000 American adults age 18 and over conducted at the end of December, Americans used the USPS more in the most recent holiday than in the 2015 season.

The public also continues to give the USPS higher marks than its major competitors – FedEx and UPS – on the way it handles their packages.

For the record, ~21% of the respondents surveyed by Rasmussen reported that they used the U.S. Postal Service more this holiday season than they have in previous years, while ~18% reported they used it less. The remaining ~61% kept their USPS usage at around the same level of activity.

On the commercial side, for many businesses who do not have the kind of high volume shipping needs to qualify for special pricing from FedEx or UPS, the USPS also appears to be a far more lucrative choice from a price-to-value relationship.

usIn mid-2015, undertook apple-to-apples comparisons of the three big package delivery firms, and found some startling differences.  For example, to ship a 3-lb. package overnight-delivery from New York City to Los Angeles, using FedEx would set the sender back $83.  UPS was even worse, at $84.

The USPS price?  Just $24.99.

Comparing short-haul rates as well as heavier 10-lb. packages found similar major discrepancies — all in favor of using the U.S. Postal Service. On top of that, the USPS provides free packaging materials, complimentary pick-up service, free insurance and tracking — not to mention flat-rate boxes for packages that weigh up to 70 lbs.

feSealing the deal further, while FedEx’s 50,000+ and UPS’s 63,000+ locations worldwide are certainly nice to rely on, the number of USPS locations dwarfs those figures by a country mile. Those myriad USPS locations also mean that packages can be shipped to P.O. boxes in addition to physical addresses – something that’s out of the reach of either FedEx or UPS.

People love to beat up on the United States Postal Service.  But say what you will about the USPS, its problems and its financial challenges, they’re still a major-league bargain for many consumers and businesses.

What?! A Reduction in Postal Rates?

The first class postage rate is going up again this month.  But not so fast!  The USPS is actually having a sale on postage as well.
The new first class postage rate is going up again this month. But not so fast! The USPS is actually having a sale on postage as well.
Death … taxes … rising U.S. postal rates. It seems all three of these things are just a given. And the USPS is getting ready to up the price mailing a first-class envelope another 2 cents, effective next week.

But hold on! Because it’s suffering from a significant decline in mail volume approaching 15%, the USPS is concurrently rolling out a special program heretofore never seen from this most politically tin-eared of government agencies. The impressively named Saturation Mail Incentive Program gives large standard mail direct marketers who increase their mailing volumes the opportunity to earn per-piece credits — discounts essentially — on their mailing activity.

The discounts themselves are rather small — ranging from 2.2 cents per nonprofit letter mailer to 4.0 cents per flat piece (catalog).

… And the “fine print” conditions as to who actually qualifies for the discounts are almost byzantine in their description.

… And the savings are for a limited time only (~1 year) beginning this month.

… And program participants must formally apply to the USPS for approval.

… And they must do so by June 11 or lose their opportunity to participate at all.

… And, and, and … Well, you get the idea.

But the fact that the postal service is actually throwing a “sale” on rates is big news in and of itself. When has this ever happened before?

Quoting the eloquent words of USPS spokesperson Michael Woods, “The Postal Service is always looking for ways to use our pricing flexibility to improve business, and the current economic climate makes that more important than ever.”

Translation: “We’ve lost a pile of business in the economic downturn, and maybe if we lower our prices, we’ll get some of it back.”

Good luck.

We’ll check back after a few months to see how things are going. Judging from the most recent financial results published this week — a quarterly loss of nearly $2 billion — we may not see much improvement. After all, the USPS has managed to make money in only one quarter out of the past eleven!

UPDATE (5/18/09) — The USPS has now finalized the program, which will now launch July 1. Details are here.