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January 21, 2018 USPS Rate Increase - How will this Affect Your Business?

Atlanta, GA - Many companies selling direct to consumer on-line use USPS shipping methods to effectively reach their customers at a postal price point. A price increase was approved for the USPS in late 2017 and will take affect January 21, 2018.  To provide an overview of the upcoming changes, below is an industry article, attributed to Krish Iyer of Shipstation, to explain the highlights. 

USPS Announces Rate Change for 2018

by Krish Iyer from Shipstation blog 

As FedEx has already done, the USPS followed suit with their own rate change that will take effect on January 21st, 2018.  Postal Regulatory Commission (PRC) approval was gained in Nov., 2017.  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.  

If you have questions about the upcoming USPS Rate Increase and how it could impact your business, feel free to reach out to FSI.  800-979-9012 or info@fsifulfillment.com  We’re here to help!

View complete article at:  https://www.shipstation.com/blog/uncategorized/shipping-news/usps-2018-rate-change/

 

 

 

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