You may remember the USPS announced a 6.5% rate hike for First Class Mail rates effective July 10 – including the cost of a stamp rising to 60 cents. The other shoe dropped today (Friday) – the USPS filed with the Postal Regulatory Commission (PRC) for its planned changes to “competitive” services, which will also take effect in July.
But it seems sellers have dodged a bullet as far as Priority Mail and other competitive rates are concerned (with one possible caveat, see below), though sellers should enjoy it while it lasts. Postmaster General Louis DeJoy said yesterday, “I believe we have been severely damaged by at least 10 years of a defective pricing model—which cannot be satisfied by one or two annual price increases—especially in this inflationary environment.” We’ll have more to say on his remarks soon.
The following is the USPS’s summary of the changes it announced today:
The Postal Service is not changing prices for most competitive products in this case. However, some price and classification changes are being made to Priority Mail, Parcel Select, and certain International Special Services, as follows:
• Eligibility requirements for Priority Mail Commercial Plus Cubic will be removed, so that all commercial customers can use Priority Mail cubic pricing.
• Classification changes will be made to increase insurance to $100 for Priority Mail and to extend the inclusion of $100 in insurance to Priority Mail Returns.
• Cubic pricing will be introduced for Parcel Select Ground.
• Price changes for Outbound International Insurance and International Money Transfer Service (IMTS)-Outbound will be made, in response to recent directives from the Commission in its FY 2021 Annual Compliance Determination.
More insurance is good, and greater availability of cubic pricing is good. And while I might have missed it, I didn’t see any rate increases (confession: I skipped the last bullet point as it didn’t look like it would impact many online sellers – let me know if it impacts you and how).
At first glance, I thought the expansion of cubic pricing would result in higher costs, but I had been thinking of “dimensional” pricing. Stamps.com has an explanation of cubic pricing on its website, where it states, “USPS Cubic Pricing provides high volume shipping customers discounted rates for small, heavy packages.” How high-volume? Customers must ship over 50,000 packages a year, it explains.
That’s an average of 4,166 packages a month, or an average of 951 packages a week.
Now for that caveat mentioned above: In today’s announcement, the USPS wrote: “Separate from the filing, the Postal Service is also planning to update the way the distance between origin and destination ZIP Codes is calculated to determine zone assignment. Rather than using the distance between origin and destination plant, the Postal Service will use the distance between 3-digit ZIP Codes to determine zone on July 10, 2022.”
We don’t yet know what that means or how it will impact sellers – we’ll work to find out.
In the meantime, you can learn more about the July 10th rates for market dominant rates in this April 6th EcommerceBytes article. As we reported at the time, the USPS was seeking to raise rates for certain services, including Mailbox rentals (6.8% higher), and money orders (14.4% higher). In addition, the Postal Service was seeking price adjustments for insurance and for Certified Mail.
You can dig into details of the July 10th changes for competitive services, announced today, in this USPS filing on the PRC website.