Specifically, rates will increase for these classes of mail…

Domestic Services

Express Mail
Priority Mail
Parcel Select
Parcel Return

International Services

Global Express Guaranteed
Express Mail International
Priority Mail International
Airmail M Bags

Surprisingly, Bound Printed Matter rates will not increase, even though it’s package services cousin Parcel Select will. Standard Mail and First Class parcels will also not go up at this time.

The USPS news relase, with links to rate tables and files, can be found here.

Even with this rate increase, the USPS remains one of the best values in shipping. Especially for small parcels. They remain 7-14 percent below their competition in most classes. When comparing bulk rates, the differences can be much higher. Drop shipping and other advanced techniques can lower your costs even more.

With dropping volume in letter mail, the USPS has been emphasizing their packages services in recent years. They have been particularly aggressive with flat rate Priority Mail boxes, targeted at eBay sellers, and Express Mail services. 

Two rule changes allow them to become even more competitive in the package services (shipping) market. They will now use zones to calculate the postage on  shipments that formerly had fixed prices, and they are now able to offer discounts based on mailing volume and source of sale (online shipments for example). 

Here are some of the details of the new shipping rates…

Here are the major changes to Priority Mail:

• Customers can pay less by buying online.
• Flat-Rate boxes are now offered in a new, 50% larger size, designed for businesses.
• A new, reduced Flat-Rate box price for APO and FPO (military) addresses.

The USPS has always been very effective in high volume situations. New prices will
leverage and expand this advantage.

Parcel Select is shaping up to be a very interesting service. We’ll concentrate on it further  in future discussions. In the meantime, you should check it out if you ship a lot of small parcels.  Bound Printed Matter has always been a very efficient method of shipping books. Parcel Select will spread the cost savings to other types of parcels.

Normal pricing will continue to apply to customers who come to the Post Office, but now they’ll find lower prices if they pay online, use corporate accounts, or meet minimum daily volumes.

Previously, USPS prices were a higher than other shippers for short distances and a lot lower for some long distances. With the move to zone-based pricing, their prices  will be more attractive for short distances — where most of the volume is — and still have a price advantage for more distant points. 

For pieces up to 5 pounds, USPS prices are better than FedEx for every zone. Express Mail is the only product with Sunday and holiday delivery (for a $12.50 premium). Unlike other shippers, the USPS has no Saturday delivery surcharge.

There are so many more subjects, there will have to be more articles. To summarize, the USPS is redefining itself to not only handle its traditional role of letter carrier, but to expand services to include package services, returns processing, and international shipping. They’ve always performed these tasks. They’re just shifting the balance of  their pricing and marketing to reflect the changing business environment.

From a consumer’s standpoint, the most important thing is, the First Class Single Piece rate (a regular stamp) will increase from 41 cents to 42 cents. The “Forever Stamp” is already looking like a good deal.  The USPS is continuing to expand on their “shape based” initiative with a flat/”Large” envelope going up 3 cents, and parcels/”Packages” getting a 5 cent increase.

Mailers will want to closely examine the rates posted on the new USPS prices page. Our initial impressions show this to be a relatively modest increase. However, there are some surprises. While the USPS has announced lower additional-ounce price for presorted First-Class Mail letters, this simply brings the basic presort rates into line with the automation rates. They also tout a lower per pound price for Standard Mail letters (ECR saturation and high-density) and Standard Mail flats. We also note other areas where postage has dropped.

There are many complicated things going on in this new rate case. For example, in Bound Printed Matter, the per-piece rate for non-destination parcels has dropped, while the per-pound rates went up. Both the per-piece and per-pound rates for destination entry parcels increased. Mailers would be well advised to model the effects of the new rates.

Updated prices for Express Mail, Priority Mail, and Parcel Select will be released in March.