January Postage Rate Increase Might Not Happen
The Postal Regulatory Commission (PRC) threw a wrinkle in USPS's planned January postage rate increase. The Postal Service is limited to one rate increase a year, which they just implemented in July 2026. Generally, their next increase would come in July 2027 — which is, you know, a year later. "No, wait," said the Postal Service. "Let's do it in January to transition to a January rate change cycle in 2027 in a financially responsible manner." I'm not sure what makes January more "financially responsible" for an organization with a fiscal year that begins in October.
The PRC was willing to allow it — but the Postal Service had one more request. Generally, a January rate change is based purely on the change in the CPI. In the July rate case, they also apply the Density Adjustment, which allows them to add a few more percentage points to account for declining volume and increased delivery points. Rather than waiting until July, USPS asked the PRC for a waiver to incorporate the Density Adjustment in January, even though they wouldn't have the data to justify it. They promised to make a pretty good guess, but the PRC wasn't having it. If USPS wants to raise rates in January, it will have to do so without the Density Adjustment — and they can't apply it in July because they only get one increase a year. So the Density Adjustment would have to wait until January 2028.
This may cause the January increase to be scrubbed and pushed back to July. We'll have to wait and see how this turns out.
Is Airmail Back in Vogue?
One major feature of the still-in-force Delivering for America plan was flying less First-Class Mail and trucking it to closer destinations to reduce air transport costs. But it seems the Postal Service is now flying more First-Class and Marketing Mail. Why? USPS has an air cargo contract with UPS to fly parcels and Priority Mail on UPS planes. Parcel volumes have not met expectations and Priority Mail volume has plummeted, but the contract guarantees a minimum average daily volume — so the Postal Service is meeting that minimum by backfilling with First-Class and Marketing Mail.
The change has improved service for some four- and five-day service standard mail. Whether this mail will eventually be grounded again remains to be seen.
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