Summary

Big changes are on the horizon for e-commerce businesses who ship items under one pound. Data from the marketplace reveals that nearly half of all Postal Service eCommerce volumes fall into this category—this is no small deal. These changes will have a significant impact on a large portion of the eCommerce industry, particularly among carriers like DHL eCommerce and USPS, and with Pitney Bowes exiting the space, the landscape is shifting rapidly.

What’s Happening?

The USPS is making an important shift by discontinuing a key element of their postal workshare program. This program traditionally provided partner carriers with discounts for individual packages weighing less than one pound—a fundamental aspect of the lightweight shipping sector. As this program phases out, carriers like Amazon Prime, UPS, FedEx, DHL, and others will no longer have access to those discounts, which is expected to lead to higher shipping rates for packages under one pound starting in January.

What Does USPS Want You to Do?

USPS is encouraging shippers to transition their volume to the USPS Ground Advantage service, which offers a different balance of speed of delivery and cost compared to what you might be accustomed to. We anticipate that many shippers could see rate increases ranging from 8% to 25%, particularly for light items—those weighing between 1 ounce and 8 ounces. These changes will vary depending on the package size and delivery address of your shipments.

What Should You Do?

Now is the time to reassess your shipping strategy. Fortunately, the market is evolving, with new direct delivery solutions emerging from regional and local shipping companies that are equipped to handle light items. Flexibility will be key—adopting a multicarrier solution will become increasingly important.

While USPS Priority Mail will likely remain an integral part of your carrier mix, these changes may prompt some small businesses to explore additional options. For example, if you're currently shipping exclusively through USPS workshare, you might be facing an 8%-25% rate increase. However, by diversifying with a multicarrier approach, you could reduce that increase to 4%-12%. While not perfect, it's a more manageable solution.

Lightweight shippers might also need to consider new strategies, such as encouraging customers to add more items to their cart to qualify for free shipping, introducing moderate surcharges for faster home delivery, or passing along some of these costs to customers.

Where Will It Be Most Impactful?

Rural areas may experience the greatest challenges. With fewer alternative carrier options, shipping costs to these locations could increase the most. If you frequently ship to rural areas, it's important to prepare for potential cost adjustments, especially for heavy items or freight shipping.

How Xparcel Can Help

FirstMile's Xparcel helps you manage your shipping more efficiently by offering a variety of shipping methods through one carrier selection and one simple ship method. While Xparcel includes USPS Ground Advantage, it also provides access to a wide network of regional, national, and local carriers. Simply selecting Xparcel as your shipping method ensures you get the best delivery option for every shipment, whether that’s USPS or another carrier. This flexibility helps keep your shipping costs in check, especially in large metro areas—where, by the way, about 80% of e-commerce volume is happening.

Is There Any Good News?

Yes, there is a silver lining! If you’re shipping heavy packages (over one pound), you’re in a better position. With more carrier options on the table, you might be able to mitigate much of the typical annual rate increases. A multicarrier strategy will provide you with the flexibility to take advantage of these savings when they arise, helping to offset the costs of your sub-1lb shipments. Additionally, understanding dimensional weight and using dim weight calculation effectively can help optimize your shipping strategy.

With all these changes on the horizon, it's clear that e-commerce businesses need to proactively adjust their shipping strategies to stay competitive. Whether you’re exploring new carrier options or seeking ways to minimize the impact of rising costs, now is the time to carefully evaluate your choices. If you’re looking for a solution that offers flexibility and cost savings, FirstMile’s Xparcel could be a valuable addition to your strategy. We’d be happy to discuss how our services can help you navigate these upcoming changes. Feel free to reach out if you’re interested in learning more.