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USPS 01-17-16 Rate Increase Pros & Cons

USPS Rate Increase Pros and ConsCustomers mailing documents can relax. You won’t see an impact with letters and flats. These rates are staying at current levels.

Did you know that postal rates are tied to the Consumer Price Index? Currently the CPI is running between 0-2%.  So why is there an overall average of a 9.5% increase in shipping service fees? Simply the CPI does not impact any of the USPS’s “Competitive” shipping services. It’s here the USPS has flexibility in determining rate increases and decreases. Don’t forget the USPS reduced rates for specific Priority Mail® weights and zones back in May 2015.

Many postal analysts are speculating that these increases revolve around:

  1. Small package business-to-consumer deliveries have been beating other carriers. Even with the increased fees the USPS will continue to stay competitive against high volume shippers with private carrier negotiated rates; even when you factor in fuel and accessorial charges.
  2. The UPS® complaint to the Postal Regulatory Commission that recent polices are anticompetitive.
  3. On average, the private carriers increase rates about 5% every year.
  4. And with the increase of online commerce, the USPS is in a position to take advantage of the fastest growing area of their business.

Priority Mail®

USPS Priority Mail January 2016 Rate Change

Priority Mail® is covers items weighing 13 ounces to 70LB’s and delivers in 1-3 days throughout the US.  These rates are based on the weight and 8 primary zones determined by the distance you are shipping the item.  They also have three different rate categories based on the customer type.

  • Retail – Rates at the Post Office counter or through a Postage Meter.
  • Commercial Base – Customers that use an approved PC Postage solution get significant discounts over Retail rates as an incentive to streamline the way packages are labeled, bar-coded and data is transmitted.
  • Commercial Plus – Customers that ship over 50,000 items per year can get additional discounts with an agreement with the USPS.

A fourth category is tied to companies that provide mail solutions that streamline mail centers and shipping departments with time saving software tools.

  • SMART Parcel NRA rates provided by TheMAILGroup to clients using their software tools. The combination of implementing these efficient processing tools results in reduced labor costs and additional rate savings.

First-Class Mail® Parcels

USPS First Class January 2016 Rate Change
The USPS is rethinking the discounted services for the less than 1LB market. Private carrier rates start at 1 LB as compared to the USPS rates being tied to the ounce. The USPS has a competitive edge when sending a light package for around $3 vs. private carriers with fees 2-3 times that of the USPS.

First-Class Mail Parcels and Packages changes:

  • Retail rates remain unchanged.
  • Commercial Base items will see rates increase up to 69%. This is occurring in the following ways:
    • Elimination of any presort discounts (5 Digit, 3 Digit and ADC (area distribution center) Rates are no longer available). These presort rates had offered shippers 7-25% additional discounts.
    • Slight price reductions for 13 ounce single piece items.
    • Rates changes apply to 15.999 ounces formerly 13 ounces. This has a direct impact on clients forced to use Priority Mail rates for 13-16 ounce packages.
  • Elimination of Commercial Plus Rates – This does not seem like a big issue now that Base rates can go up to 15.999 ounces.

Other Rate Changes

  • Priority Mail Express Rates are increasing an average of 15.6%. The USPS is eliminating the flat rate boxes.
  • Parcel Select Ground is being renamed Parcel Select Nonpresort and is increasing an average of 3.1%.
  • International Mail rate increases:
    • Priority Mail International – 10.2%
    • Priority Mail Express International – 11.6%
    • First Class International Package – 21.6%

Summary

Take some time to analyze the type of items you are shipping, the weight and zones that are most common to determine the impact on your shipping expenditures.  Don’t be too quick to move away for the USPS. They are still the best choice for lightweight packages going to residences.