The U.S. Postal Service (USPS) announced late Monday that it would raise its commercial shipping rates by 3.5% on its Priority Mail two- to three-day delivery product and 1.2% on its Priority Mail Express next-day delivery product. But as with all parcel-delivery rate changes, it pays to look under the hood.
For the record, the increases will take effect Jan. 24 once they are approved by the Postal Regulatory Commission (PRC), a separate agency that is required to sign off on all Postal Service pricing changes. The Postal Service said in a statement that the proposed rates will keep the agency competitive in pricing while generating needed revenue. More often than not, the Postal Service is the lowest-cost small-parcel delivery provider.
However, what a Postal Service shipper publicly sees may not necessarily be what it will get. For example, rates on USPS’ First-Class Package Service (FCPS), which apply to parcels weighing 15.99 ounces or less, will rise by 6%, according to an analysis by consultancy Shipware LLC. FCPS rates on parcels weighing 1 to 4 ounces and shipped short distances will rise nearly 10%, Shipware said. The increases will diminish as parcel weights increase, Shipware said.
Rates on parcels weighing 1 to 10 pounds and shipped via USPS’ Parcel Select service, where bulk consignments handled by parcel consolidators are dumped into the postal network for last-mile residential deliveries, will rise 5.9% for parcels inducted at the “Destination Delivery Unit” (DDU), Postal Service lingo for the local post office. Parcels inducted further upstream at Sectional Center Facilities (SCFs), which serve as processing and distribution centers supporting local post offices, will rise 7.2%, according to Shipware.
“Parcel Select Lightweight,” which offers the same service as Parcel Select but for parcels weighing less than 1 pound, will jump by 18.8% for pieces inducted at the DDU level, based on Shipware’s calculations.
Priority Mail shipments weighing more than 5 pounds will see an 8.2% increase. However, few Priority Mail shipments exceed 4 or 5 pounds.
Gordon Glazer, senior consultant and USPS specialist at Shipware, said in an e-mail that the increases will result in consumers paying much more for lightweight e-commerce shipments, but experiencing “mild” year-on-year increases on packages like Priority Mail, which the Postal Service handles on a door-to-door basis.
In a separate e-mail, Glazer said that in the “lightweight, under a pound economy, the 20% increase would seem somewhat out of place with elasticity conscious strategies. However, there is little competition here and the increase will be felt by all the carriers and consolidators that use the USPS for final-mile delivery.”
