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USPS 2014 Rate Hike to Impact Online Sellers

Like death and taxes, annual rate hikes from shipping carriers are a certainty – the only positive thing about them is that they occur after the holiday shopping season. This week, the other shoe dropped from the US Postal Service as it announced rate hikes for Priority Mail and other shipping services.

In September, the USPS asked for permission to raise market dominant prices above the limit allowed it (called an exigent request) as part of an emergency measure which it called necessary unless it received relief from Congress. On Wednesday, the Postal Service submitted rates for competitive products, which has no such limitation.

In a press release, the USPS said when new Postal Service Shipping Services prices take effect in January, customers would see an overall price increase of 2.4 percent. The Postal Regulatory Commission (PRC) will review the prices before they become effective on Jan. 26, 2014.

Priority Mail is much used by smaller online sellers, so we take a look at those changes first. Remember that in August, the USPS rebranded “Express Mail” to “Priority Mail Express.”

Domestic Priority Mail 
It appears many retail Flat Rate prices for Priority Mail will remain the same, while large Flat Rate boxes will see an increase: Small, $5.80; Medium, $12.35; Large, $17.45 (up from 16.85); and Large APO/FPO/DPO, $15.45 (up from $14.85). The regular Flat Rate Envelope will be priced at $5.60, with the Legal Size and Padded Flat Rate Envelopes priced at $5.75 and $5.95, respectively.

The USPS did not indicate in its Wednesday filing the average percent rate increase for Priority Mail, including non-flat rate prices, and it will take the online sellers and the experts some time to wade through the rates to determine the impact. To see the new rates yourself, visit this PDF-formatted page on the PRC.gov website.

Priority Mail Express (formerly called Express Mail) 
Overall, the Priority Mail Express price change represents a 3 percent increase. Retail prices will increase an average of 3.1 percent. The price for the Retail Flat Rate Envelope, Padded Flat Rate Envelope, and Legal Flat Rate Envelope, a significant portion of all Priority Mail Express volume, is increasing four cents to $19.99. The Flat Rate Box price will increase from $39.95 to $44.95. Commercial Base rates (for customers who use online postage) will increase 2.9 percent. Commercial Plus rates (for large-volume customers) will increase 0.6 percent.

Additionally, a 10:30 am delivery time option will be added for Priority Mail Express for $5.00.

Among the other noteworthy changes:

  • The overall increase for Priority Mail International (PM I) will be 1.1 percent. Also note the addition of Flat Rate Commercial Base and Commercial Plus prices for Priority Mail Express International and Priority Mail International.
  • On average, prices for Parcel Select, the Postal Service’s bulk ground shipping product, will increase 5.9 percent.
  • Overall, Commercial First Class Package Service prices will increase 5.0 percent, with no structural changes.
  • Standard Post prices will increase 5.2 percent for 2014. Prices in Zones 1-4 will now align with the retail Priority Mail prices for those zones. Therefore, customers shipping in those price cells will receive Priority Mail service, and will only default to Standard Post if the item is not permitted to travel by air transportation.
  • The overall increase for First-Class Package International Service (FCPIS) Retail prices will be 0.8 percent; FCPIS Commercial Base and FCPIS Commercial Plus prices will remain unchanged. Pickup on Demand will be made available for FCPIS.

Exigent Rate Request 
As noted above, the USPS requested that it be allowed to raise market dominant prices above the limit allowed it. Last week, Pitney Bowes noted an interview in Direct Marketing News in which Deputy Postmaster General Ron Stroman expressed a firm belief that postal reform could be enacted by Congress in the coming months and that a 4.3% exigent rate increase could be averted.

The USPS also made news this week when Amazon announced the USPS would soon start delivering its packages on Sundays.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.