As FedEx has already done, the USPS followed suit this week to announce their own rate change that will take effect on January 21st, pending Postal Regulatory Commission (PRC) approval. As expected, the rates increased year over year, but there were a few surprises.
The announced rate of increase is 3.9% for shipping services; mailing services will increase by 1.9%. As with other carriers, this announced rate change encompasses the broad range of products and services, and the actual rate of increase for your specific shipment mix might differ.
For example, consider the following USPS services:
First Class Package rates: shipments in the 1-5 oz range see a modest 1-2% increase but jump significantly year over year in the 5 oz weight category (5%) and in the 7 and 8 oz category (10 and 15%, respectively).
Flat Rate: Flat rate products will increase by an average of 7%, with the padded flat rate envelope increasing by 10%. The small flat rate box will increase by 10%, while the larger sizes will only increase by 3-4%.
Cubic pricing will increase by 5.2%; the larger tiers, however, will decrease by a slower rate at 2% year over year.
Parcel Select and Parcel Select Lightweight. The Parcel Select products are the most popular options in e-commerce. FedEx, UPS and many other carriers utilize these “final mile” products where final delivery is performed by the USPS with products such as FedEx SmartPost and UPS SurePost or Mail Innovations. Note the following:
- Parcel Select Lightweight will increase by an average of 5.3%.
- The average increase for Parcel Select (DDU entry) for packages 1-10lbs is 7.4%.
While 5.3 and 7.4% year over year increases may seem somewhat surprising, it is important to note that the Parcel Select service has rapidly gained in popularity, especially with e-commerce shippers and carriers themselves who wish to utilize the strong residential delivery network of the USPS.
What it all means? While some services have increased at a faster rate than others, the overall year over year increases are fairly modest. It is also important to note that no new USPS surcharges have been added for 2018, thus making these services a good option as part of a shipping strategy mix.