Ruling Could Result in Higher Shipping Costs for Online Sellers

Online sellers could face higher shipping costs as a result of today’s ruling by the Postal Regulatory Commission (PRC), which ruled that the USPS must attribute a greater percentage of its “institutional costs” to Competitive products, which include Priority Mail, Priority Mail Express, and First-Class Package Service.

The current requirement for Competitive products is 5.5 percent of USPS institutional costs. For Fiscal Year 2019, the appropriate share is 8.8 percent. And under today’s ruling, the appropriate share will be updated annually, leaving the door open to higher costs for Competitive products each year.

The USPS warned that setting the minimum contribution level too high could force it to raise prices artificially in order to meet the new requirement – “a result that would harm the Postal Service, its customers, and American consumers,” it wrote in its April filing with the PRC.

The ruling could have a broader impact on shippers: if the USPS was forced to continually raise shipping rates artificially, UPS and FedEx might feel emboldened to raise their rates higher than if they faced more competitive rates from USPS.

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