USPS Shipping Rate Changes
For small businesses nationwide, shipping represents a large portion of operating costs. “In this new world of commerce,” says Pitney Bowes Vice President Jeff Crouse, “shipping has become even more critical as businesses compete for and serve clients remotely and connect with their vendors and suppliers.” In this business environment, price hikes are big news. That’s why it’s so noteworthy that the last three years have seen regular rate increases across most carriers, including USPS. But why are prices increasing year-after-year?
Why Rates Changed
The reason is simple: demand increases, and so does price. To a large extent, this isn’t even about turning a profit. For several years now, USPS has actually lost money. This comes at a time when their package volume increased by 589 million deliveries from the year before. For USPS anyway, rate increases represent a federal policy initiated to recoup some of the costs.
Price increases also mean an increase in carrying capacity as carriers can hire more workers and expand their fleets. It looks like rates will continue going up on an annual basis, especially since e-commerce will only continue to expand in the future. Carriers across the board want to avoid repeating the debacle of 2013, where UPS and FedEx were consistently delivering packages late for the holiday season.
It’s worth noting that USPS has also been gaining market share at the expense of the other two big carriers, and it’s not hard to see why. This year’s price increases were significantly smaller for USPS compared to FedEx and UPS. Shippers are starting to realize that customers want reliable delivery over brand name service.
So, what’s changed for USPS this year?
The New USPS Rates
Note that all prices are based on USPS Commercial Plus Pricing.
USPS rates changed on January 17th , 2018 for the following products:
- Priority Mail
- Priority Mail Express
- Parcel Select
- Standard Post renamed Retail Ground
- First-Class Package Service
Compared to competitors, USPS rates increased by the smallest margins. Priority rates, for example, are 50-75% cheaper than standard two day delivery options from UPS or FedEx. Rates across the board increased an average of 3.9% for USPS, compared to the average of 4.9% for the other two big name shippers.
Rate changes are not even across all products. For first-class packages, those under four ounces only increased by five cents while heavier packages increased an average of 19 cents per delivery. Note that packages under four ounces are now much simpler to calculate – the rate is set at a flat $2.66, while heavier first-class packages have varying rate changes.
Flat rate boxes, famous for their “if it fits it ships” tagline, saw an increase between 40 and 60 cents each. These options still accept deliveries up to 20 pounds for any destination. Most products jumped by 60 cents, with only medium sized boxes increasing by the lower 40 cent margin from $12.05 to $12.45 per box.
Priority mail pricing depends on zone and weight, but average prices increased by 6.2% overall. It’s also worth noting that some weight and destination combinations actually decreased in price
from 2017. Pricing for this product line ranges between $6.35 for zone 1 and 2 packages at a maximum of one pound, all the way to 10-pound zone 8 packages at $35.61.
What You Can Do
First and foremost, you should review the pricing estimates for the product lines you use. If your business relies on any of the big three shipping companies, you’re going to see a price increase, no doubt about it. To mitigate these expense increases, you may want to evaluate your relationship to any one carrier. In addition, keep in mind technological advances. Apps and cloud-based software make choosing your carrier much easier, as well as let you compare/contrast pricing for any particular parcel.
Many carrier services are willing to negotiate with loyal customers about favorable rates. In addition, check to see if you qualify for certain shipping rates with carriers like USPS, such as Commercial Plus Pricing, or CPP.
Beyond these options, there’s an increasing market for multi-carrier shipping companies that can help you optimize your shipment plans. Most deliveries can be made significantly cheaper by using multiple carrier services to take off some of the cost. These optimization companies help you plan your shipments for the lowest price possible.