U.S. Postal Service:

Postal Ratemaking in Need of Change

GGD-96-8: Published: Nov 15, 1995. Publicly Released: Nov 15, 1995.

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GAO examined the U.S. Postal Service's proposals for modifying the postal ratemaking process, focusing on: (1) how the current ratemaking process could be improved; and (2) the effects of the 1970 Postal Reorganization Act on postal rates.

GAO found that: (1) the Postal Service has petitioned the Postal Rate Commission to give it more flexibility in pricing postal products and establish a market-based mail classification schedule; (2) new Postal Service pricing mechanisms could minimize mail volume losses and keep rates lower for most mail classes; (3) Congress may have to clarify the 1970 ratemaking criteria because the Postal Service and Commission disagree on the extent that market forces impact postal rates; (4) postal ratemaking usually takes 10 months to complete and it does not include the time the Postal Service spends preparing rate cases and appeals; (5) proposed postal ratemaking reforms include developing accelerated procedures for market testing new products, establishing rate bands for competitive products, and allowing volume-based rates for high volume shippers; and (6) the Postal Service needs to be able to control labor costs and resolve workforce issues to remain competitive in the postal marketplace.

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