Few USPS International Products Below Costs
The Postal Service is required to file with its regulator, the Postal Regulatory Commission, an Annual Compliance Review, a report on a variety of data on costs, revenues, rates, and quality of service, in order to “demonstrate that all products during such year complied with all applicable requirements.” The report for Fiscal Year 2023 indicates that a few international products did not cover their costs last year.
Inbound Parcel Post at UPU rates fell below costs, but the prices USPS charges for this product is determined by the UPU’s inward land rates. ISAL (international surface airlift) also didn’t cover costs in FY2023 due to accounting adjustments that resulted in “substantially higher settlement expenses” as the primary reason. In addition, the accounting adjustments recorded in this fiscal year impacted the financials for numerous outbound international NSAs. However, USPS raised prices on ISAL in January 2023 by 12% and ISAL prices will go up again on Jan. 21 by 3%, so ISAL should be compensatory this current FY2024.
A few international special services were also below costs. Finally, the ACR indicates that 8 outbound contracts did not cover costs, but only four of those contracts are active and expire on May 31, 2024. The ACR says, “The Postal Service is in the process of reviewing the extent to which cost coverage for these NSAs should improve as a result of the roll through of the competitive published price change that is the subject of Docket No. CP2024-52 [competitive products rate and classification case], which goes into effect on January 21, 2024.”