Upcoming USPS Rate Changes

Tweet about this on TwitterShare on FacebookShare on Google+Share on LinkedIn

sad-usps-trucks

Effective January 17th (this coming Sunday), USPS is changing their rates. Here’s what it means for you as a merchant.

The Basics

You’re likely already familiar with the difference between USPS’ services and rates, but here’s a quick recap. For ecommerce merchants, there are three general services (or products) that most use – First Class, Priority Mail, and Priority Mail Express. Each of those services has Retail, Commercial Base, and Commercial Plus rate classes that determine the cost to ship.

Retail rates apply if you’re simply walking into a USPS post office and shipping a package – your average Joe sending a gift to Mom uses these. Some ecommerce merchants have Commercial Base rates – they open an online postal account, such as Endicia, so their rates are a tad lower. The latter – commercial plus rates – are negotiated rates usually based on volume. 

Commercial Plus rates can be based on weight and zones, and they are also programs based on dimensional weight shipping that allow companies (such as ourselves) to provide their customers with greater discounts by hammering out a deal with USPS.

The Changes

Before we get into the specific changes by product, we want to let you know that all the information below is provided by our friends at Endicia. It’s also the most relevant information for our merchants based on the services that the majority of them use.

Prices are going up for anyone that uses USPS. These price changes may seem high, but Ordoro merchants can expect cheaper rates through our negotiated agreement with USPS. Without further ado, let’s jump in to some of the big adjustments.

First Class

Typically, First Class is used when products are lightweight, and relatively small. The delivery is 2 – 3 days, and it’s a commonly used service. Rates are calculated by weight alone.

Significant changes:

  • Expect an overall increase of 7.6%, equalling around $0.13 more per package.
  • In the past, first class was limited to packages weighing 13oz or less, but now will be extended to packages weighing up to 15.999 oz.

Priority Mail

Most ecommerce merchants use Priority Mail due to its flexibility and cost effectiveness. There are a variety of ways to ship, including zone-based pricing, flat rate envelopes and boxes, and regional rate pricing. Another one of the key appeals to Priority Mail is free packaging and tracking from the Postal Service. Plus, they have $50 of free USPS insurance coverage.

Based on Commercial Plus Pricing, below is a chart from Endicia that includes the average percent and price increases by method for Priority Mail:

Priority Mail CPP

Significant changes for Priority Mail:

  • Rates for Regional Boxes are the same for Commercial Base and Commercial Plus.
  • Due to low usage, Box C will be discontinued.
  • Critical Mail is also being eliminated due to low usage.
  • Commercial Plus Pricing no longer exists for international shipments.

Priority Mail Express

As the ‘express’ part suggests, Priority Mail Express is typically used to get packages delivered quickly, whether it’s overnight or within a day. It offers similar services to regular Priority Mail, including regular zone-based pricing, and flat rate envelopes. Free packaging is available, and tracking is free.

Based on Commercial Plus Pricing, below is another chart from Endicia that includes the average percent and price increases by method for Priority Mail Express:

Priority Mail Express CPP

Significant changes for Priority Mail Express:

  • Priority Mail Express Commercial Plus rates now match Commercial Base rates.
  • Priority Mail Express Flat Rate Boxes will be eliminated due to insufficient volumes.
  • Packages weighing 5 pounds or less, Commercial Plus rates (Zones 1-8) are increasing an average of 40.8% or $8.72 per piece.
  • Commercial Plus Pricing no longer exists for international shipments.

Additional Points

While rate increases are never helpful for retailers’ margins, all major carriers – including UPS, FedEx, and Canada Post – have raised their rates over the past two months. USPS rates have gone up as well, but they’re still preferable for most retailers, especially those shipping lighter packages.

Regardless of the increase, you’ll still end up with discounts of up to 67% through our agreement with USPS. For our new, Ordoro specific rates, check out our support article on the topic.

These are general guidelines on the significant changes affecting the majority of our merchants. To find additional information regarding your own specific needs, download Endicia’s rate change information.