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Postal Service to reverse rate increase for rural Alaskans

  • Author: Alex DeMarban
  • Updated: September 28, 2016
  • Published March 7, 2014

The reversal in postal rates that many rural Alaskans expected in mid-February -- after assurances from Sen. Mark Begich -- will happen by the end of the month.

The Postal Regulatory Commission approved the rollback on Friday for some 200 communities in Alaska that can't be reached by road after a series of unexpected requirements held up the decision. The reversal to the old rates will be implemented after a 30-day comment period ends on March 20, and after computers and software are altered to accept the reduction, officials with the Postal Service said.

The USPS said in a release sent to media on Friday that it is unveiling a new pricing category, Limited Overland Routes, for those off-road areas that cover most of Alaska.

"We recognize that there are Alaskans who have limited or no road accessibility and depend on the Postal Service to help them access goods like groceries and medications through the shipment of heavier parcels," said Alaska district manager Ron Haberman. "The new pricing category will re-establish the same rates those customers enjoyed prior to the January 2014 price changes."

The fiasco began on Jan. 26, when the postal service -- in a move that surprised Alaskans -- boosted rates nationwide for what it once called "parcel post" and now calls "standard post." The increase affected just 0.27 percent of "standard post" volume nationwide.

But it had a disproportionate effect on Alaska's off-road communities, said Ernie Swanson, a spokesman with the postal service. Scores of villages were hit harder than the rest of the country, in part because villagers send and receive heavier packages than most Americans. Semis can't just drive down the road to a village, roll up to a warehouse and deliver stuff people need, things like food, machine parts and tools.

So villagers are frequently getting all kinds of things in the mail: Tires, fishing nets, whale meat, you name it.

Under the Postal Service's boosted rates, shipping costs rose significantly as the package got heavier. Begich has said the price to ship packages weighing 50 pounds or more jumped 50 percent with the rate hike. But even that is a conservative estimate, Begich said.

Recently, companies sending products to villages were forced to raise their prices to cover the increased shipping costs, burdening residents in some of the state's most impoverished areas.

Begich serves on the Homeland Security and Government Affairs Committee, which has jurisdiction over the Postal Service and makes the laws for the Postal Regulatory Commission. Begich has urged top officials to implement the reversal quickly because it's hurting rural residents.

On Feb. 6, Begich announced he had convinced Postmaster General Patrick Donahoe to reverse the rate hike and that "Alaskans should see relief from soaring postal costs by next week."

In their meeting, Donahoe had been under the impression the USPS could reverse the rates right away, said Heather Handyside, a Begich spokeswoman. But after the meeting -- and Begich's announcement -- it became clear that a public comment period and approval from the Postal Regulatory Commission were needed before the rollback could occur, she said.

Companies doing business in rural Alaska are anxious to get the rollback in place.

Chris Jett and her husband own Mailbox Groceries, an Anchorage business that accepts online orders and mails food to the Bush. Jett said the cost to ship 70 pounds of food jumped from $24 to $41, a 71 percent increase.

"The bottom line is our customers end up paying the postage, and we have concerns for them because many of them don't have much money to begin with," she said.

On Friday, she said she was "thrilled" to hear about the rollback. "If it's true, I could not be happier for my customers," she said.

She added she can't reduce her prices until the Post Office reverses the rate hike.

"I have to see it and know it's happening before I can change anything because the increase is so significant that if I were to roll it back and nothing happened, I'd bleed to death in a matter of weeks."

Bill Kanerva, who owns Last Frontier Trailers in Sutton with his son, said he sells utility trailers that rural residents haul behind four-wheelers. He ships the components of the ready-to-assemble trailers in a handful of boxes. With the rate increase, the trailers cost more to mail -- a $2,000 model now requires an extra $150 in postal fees, at least.

The surprise rate hike was confounding: He didn't know whether to charge customers for the increased shipping costs or wait for a rollback. On Friday, he said he was glad to hear of the coming reversal.

"I don't have to put a big increase on my trailers, but we'll see what happens," he said.

The current battle over "standard post" rates is different than bypass mail, another unique aspect of mail delivery in Alaska that allows palletized freight exceeding 1,000 pounds to be flown to villages. Grocery stores often use it, with the idea being that it helps them lower prices in village stores. That program annually costs the postal service $76 million, a subsidy that some in Congress hope to slash. The Post Office boosted bypass rates slightly in late January.

The complicated and confusing process underscores the need for Postal Service reform, Begich said.

In a postal-reform bill moving through the Senate, Begich has introduced an amendment requiring the Postal Regulatory Commission to undertake a study designed to improved public notice and analyze the effects of rate changes when it comes to areas off road systems.

Begich's office was quick to announce the rollback early last month. Why didn't he let Alaskans know about the delay?

Getting the right answer from the Postal Service has been challenging, leading to uncertainty about when it would happen, he said. Only in the last couple of days did it become clear things would be fixed starting March 20, he said.

"We have to keep on them every day," said Begich of the post office. "The bureaucracy over there is just a jumble of issues."