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USPS Shipping Rate Hike Includes New Penalty Fees

USPS Shipping Rate Hike Includes New Penalty Fees

The USPS Shipping rate hike announced on Wednesday is bad news for online sellers, and that’s not all! There’s a new $1.50 penalty fee that could blindside sellers shipping packages if they aren’t extremely careful.

The USPS press release didn’t describe all of the changes – at first blush, it looked as if the changes applied only to Priority Mail “Retail” rates (the cost when buying postage at the post office window). But Commercial rates available to sellers who purchase postage online are also increasing.

New Fees

The USPS is adding new fees – one if sellers don’t enter accurate information about packages impacted by dim-weight rates, and other fees for packages that exceed sortation requirements.

  • “A new $1.50 fee, applicable to certain competitive products, will be assessed on parcels that are greater than one cubic foot or with a length greater than 22 inches, if the customer did not provide dimensions or provided inaccurate dimensions in the electronic manifest file.”
  • “A new series of nonstandard fees, applicable to certain competitive products, will be assessed on packages that cause the Postal Service to incur manual handling costs when the dimensions of the package exceed sortation requirements.”

While some sellers may think this is a good move to curb shippers intentionally trying to underpay, it makes it expensive to make a mistake.

USPS Priority Mail Rate Hike

Priority Mail Retail prices will increase an average of 4.5 percent. Commercial Base prices will increase 2.7 percent on average. Note that Commercial Base prices will, on average, reflect a 17.9 percent discount off of Retail prices.

USPS First Class Package Service (FCPS) Rate Hike

Overall, FCPS prices will increase 7.6 percent on average, with a 8.4 percent increase for FCPS-Retail and a 7.4 percent increase for FCPS-Commercial.

The Postal Regulatory Commission has the complete report in a PDF file on its website.

And lest anyone forget, the rate hike comes as the USPS is slowing down the mail, including plans to slow down FCPS (First Class Package Service) “after the holiday shipping season.”

The PRC will review the prices before they are scheduled to take effect on January 9, 2022.

The filing also included pricing to support USPS Connect, “a suite of affordable package delivery solutions for businesses that the Postal Service expects to launch in 2022, if favorably reviewed.”

In addition, after a 2-year market test, the Postal Service is requesting the establishment of a permanent Plus One product “which will provide additional marketing options for businesses to reach local customers utilizing mail.”

Update 12/6/2021: The USPS will go forward with its regular Shipping rate hike on January 9th, but it will delay the $1.50 Dimension Noncompliance Fee and the $4 and $15 Nonstandard Fees until April, see more in this December 5th AuctionBytes Blog post.

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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/.

12 thoughts on “USPS Shipping Rate Hike Includes New Penalty Fees”

  1. Half my packages now go to UPS or Fedex (smartpost). I’m curious to see how Amazon’s new shipping initiative will enter this fray and if it will make a difference. That 1.50 fee for “dimension” is incomprehensible. I’ll have to talk to my Postman to find out what that’s about.

  2. Wooooow, the holiday price increase was already hefty, hefty, hefty and now January looks like another uppercut. Especially first class being more expensive with much slower service. Me thinks, maybe I won’t be offering that service to my customers starting next year.

  3. Maybe I read it wrong but when they did the seasonal increase they said the next rate increase wasn’t going to happen until August 2022 then they would do 2 rates increase per year. Rate increase’s aren’t going to do them much good when a lot of small sellers quit. I’m running out of items worth selling.

  4. I left UPS years ago after the terrible handling resulted in too many becoming damaged (I pack very well) and the dim-weight pricing. A friend told me I should consider Fed-Ex but the logistics are just too inconvenient and I do not want to pay for daily pickup.

  5. This is why I mostly ship through UPS now. They are cheaper than USPS for anything over 8 oz. I do not pay for pickup, I just drop off the packages at the local UPS store. UPS handles my packages with care, the USPS does not. UPS ground and USPS Priority mail have the same actual delivery time, many times UPS Ground is faster. What forced my hand was the 30% package destruction rate from USPS. I was using USPS boxes, and they get trashed. UPS is supposed to deliver to the door and that is what they do. With another rate hike, UPS will be getting almost all of my business–even flats that used to go via First Class Mail packages.

  6. In the PDF document, the following statement is made: “manual handling costs when the dimensions of the package exceed sortation requirements.” Does this mean that USPS Priority boxes that are larger than the new boxes that USPS has changed to will incur an additional charge because of “Exceeded Sortation Size”? How and when will the charge be applied? Will it be applied for the receiver to pay as Postage Due? Who determines what is or is not “exceeding the sortation requirements”? This new rule is very vague as stated and may allow Dictator Post Office Clerks to start adding fees when even they don’t understand and/or misinterpret the Regulations.

    1. It is packages that are over 22inches. which we do not know of any USPS Priority Mail packages over 22inches. The Revenue Assurance system will determine and the charge the customer as it does now for us if we mess up with weight or dimensions. I would imagine if it is a retail package done on a self help terminal then the method of payment will be charged. This is already in place now, they are just adding a $1.50 added fee on top of the additional postage they charge back.

  7. After reviewing the rates that start Jan 9th. The current commercial rates do not change. Basically, they are just making the temporary rates now permanent. Example, current commercial rate 1st class package zone 1 is $3.76 which will be $3.76 on Jan 9th and so on. USPS Retail Ground is actually decreasing by over 6%. Also, glad to see they are launching USPS Connect Local nationwide which will definitely increase the amount of packages for USPS in certain areas thus more revenue.

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