Postal Service Rate Hike May Boost Private Carriers

he Postal Rate Commission has approved the U.S. Postal Service’s proposed 5.4% rate increase, the first increase since 2002, according to Ken Hoexter, an analyst with Merrill Lynch.

The rate increases will likely benefit package carriers UPS Inc. and FedEx Corp., he wrote in a note to clients. The two are, respectively, Nos. 1 and 2 on the Transport Topics 100 listing of North American for-hire carriers.

In a note to clients, Hoexter wrote that the January 2006 increase will increase priority and express rates in addition to first class postage increases of 39 cents, from 37 cents.

Hoexter said UPS was likely to soon announce 2006 rate increases of more than 3% for both ground and next-day air, up slightly from last year’s 2.9% increase.