Israel's Postal Reform Program Has Brought Higher Prices, but Not Yet Better Service

Leap in overseas mailing prices most affects small export-oriented businesses.

Alon Ron

The major reform that the Israeli post office has promised has resulted in higher postal rates but no major improvement in service yet. Prime Minister Benjamin Netanyahu has not yet signed a new license for the government corporation that will enable it to change how it functions, but in any event the changes, which will include more flexible post office hours with branches open until 8 P.M., are not expected to be implemented until next year. In the interim, the Israeli taxpayer is being required to foot the cost of a downsizing plan encouraging the retirement of postal employees.

New postal rates went into effect on February 1 after Netanyahu, who is acting finance minister and communications minister, signed the directive. Most postal services rose in price substantially. The price of sending a domestic letter and the cost of registered mail both went up by 21%, for example. A stamp for a regular domestic letter now costs 2.20 shekels (57 cents), including value added tax.

The most substantial rate increases came in the cost of sending mail abroad, for which rates roughly doubled. Sending a package weighing between 1.5 kilograms and 2 kilograms (3.3 to 4.4 pounds) to the United States now costs 136.20 shekels. Before the rate increase, it was 48.38 shekels. The cost of a regular airmail letter to the U.S. weighing up to 100 grams is 8.30 shekels, instead of the prior rate of 5.70 shekels.

It should be noted, however, that the February increase is the first major price increase in many years, particularly with respect to overseas mail, and up to now as a result, Israel’s rates were generally much cheaper than those charged by other country’s postal services. The new rate schedule was developed by a public committee that worked for more than a year and a half.

The Israel Postal Company sought to stress in a response for this article that the rate increase is part of a package that includes improved services. Although the average household may not be hit with a major jump its monthly spending, many small businesses, including jewelry manufactures and exporters of Judaica, some of whom ship much of their merchandise by mail and market it via Internet marketing websites, will be much harder hit.

“We are an e-commerce company that exports Israeli products abroad, primarily to Jews around the world and to Christian evangelists,” said Ran Toren of the Judaica Webstore online store. “In a good month, our postage expenses come to 150,000 shekels. We learned how to price this [by including it] in the price of the product, but when February came, overnight our costs increased by up to 170% per item. I estimate that we will now have to pay 50,000 to 70,000 shekels more per month, and not gradually, but rather all at once.”