Mailing a letter to cost a penny more next year

HOPE YEN

Asso­ci­ated Press

WASHINGTON — It’ll cost another penny to mail a let­ter next year.

The cash-strapped U.S. Postal Ser­vice said Thurs­day that it will raise postage rates on Jan. 27, includ­ing a 1-cent increase in the cost of first-class mail to 46 cents.

It also will intro­duce a new global “for­ever” stamp, allow­ing cus­tomers to mail first-class let­ters any­where in the world for one set price of $1.10. Cur­rently, the prices vary depend­ing on the inter­na­tional des­ti­na­tion, with let­ters to Canada and Mex­ico cost­ing 85 cents.

Under the law, the post office can­not raise stamp prices more than the rate of infla­tion, or 2.6 per­cent, unless it gets spe­cial permission.

The post office, which expects to lose a record $15 bil­lion this year, has asked Con­gress to give it new author­ity to raise prices by 5 cents, but law­mak­ers have failed to act.

The mail agency also will increase rates on its ship­ping ser­vices, such as pri­or­ity mail, by an aver­age of 4 percent.

The post office, which is strug­gling with debt and low cash flow, said the rate hikes were partly aimed at bring­ing in new rev­enue while main­tain­ing its pric­ing advan­tage in the ship­ping busi­ness. Pri­vate com­pa­nies such as UPS and FedEx, which offer sim­i­lar ship­ping ser­vices, reg­u­larly adjust their prices.

The post office lost $5.1 bil­lion in fis­cal 2011, mostly due to a 5.8 per­cent decline in rev­enue for first-class mail. Finan­cial results are expected to be even worse when final fig­ures for fis­cal 2012 are released next month. Ear­lier this year, it was forced to default on two pay­ments due to the Trea­sury total­ing $11.1 bil­lion for future retiree health ben­e­fits because it lacked suf­fi­cient cash reserves.

While the Postal Ser­vice has said it will con­tinue seek­ing ways to cut costs, Post­mas­ter Gen­eral Patrick Don­a­hoe has made clear that the agency has lit­tle left it can do to bring in sig­nif­i­cant new rev­enue. After months of con­gres­sional delay, he said it’s now up to law­mak­ers to pass a postal fix when they return to Wash­ing­ton after the Novem­ber elections.

The lat­est rate increase, for instance, will make only a small dent in the Postal Service’s losses, caused by the eco­nomic down­turn, move­ment of mail to the Inter­net and a con­gres­sional require­ment that the mail agency fund future retiree med­ical ben­e­fits years in advance. Ear­lier this year, the mail agency floated a pro­posal to Con­gress aimed at increas­ing stamp prices to 50 cents as a way to gen­er­ate $1 bil­lion in new revenue.

The Postal Ser­vice has also asked Con­gress to allow it reduce mail deliv­ery from six to five days a week and reduce its annual $5 bil­lion pay­ment for the future retiree health benefits.

The cur­rent 45-cent rate for first-class mail in the U.S. has been in effect since Jan­u­ary. Since 2006, the Postal Ser­vice has now increased the price of the stamp five times, from 39 cents to 46 cents.

Because stamps are now being issued as for­ever stamps, they will remain good for first-class postage. But buy­ing new for­ever stamps will cost more when the prices go up.

While the price for the first ounce of a first-class let­ter will rise to 46 cents, the cost for each addi­tional ounce will remain at the cur­rent 20 cents.

Other price increases:

—Post­cards will go up one penny to 33 cents.

—Pri­or­ity mail, small box, $5.80; medium box, $12.35; large box, $16.85.

—Pri­or­ity mail, reg­u­lar enve­lope, $5.60; legal enve­lope, $5.75; padded enve­lope, $5.95.

—Deliv­ery con­fir­ma­tion will be free on pack­ages, includ­ing pri­or­ity mail and par­cel post, rather than being an extra charge.

The Postal Ser­vice, an inde­pen­dent agency of gov­ern­ment, does not receive tax money for its day-to-day oper­a­tion but is sub­ject to con­gres­sional control.

Posted by AP News on Oct 11 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.