USPS announces 4.6% rise for parcels, express prices

The US Postal Service yesterday proposed a 4.6% price increase for its competitive parcel and express services within its Shipping Services division. The proposals, which are to be reviewed by the Postal Regulatory Commission, are expected to come into effect January 22, the same day that inflation-based increases in non-competitive mail products will also take effect.

An overall 2.1% rise in non-competitive products, including a 2.133% increase in First Class Mail and Periodicals rates, along with a 2.041% increase in Standard Mail and 2.115% increase in Package Services rates, was given the green light by the Commission yesterday.

Under US law, competitive products at the Postal Service do not fall under the same inflation-based price cap as prices for monopoly services.

Within the competitive portfolio, Priority Mail prices will increase 3.1% on average, while Express Mail prices will increase by 3.3%. The changes will mean domestic small, medium and large flat-rate Priority Mail boxes will be priced at $5.35, $11.35 and $15.45 respectively.

The First Class Package Service, the renamed First Class Mail commercial parcels category now moved into the competitive products portfolio, will see prices increase 3.7%, but will enjoy free visibility via the Intelligent Mail barcode system.

Commercial base customers will be given a 6.8% discount on retail Priority Mail pricing.

The price increases are below increases planned by rivals UPS and FedEx, who are increasing their shipping rates by 4.9% and 3.9% respectively, in line with increases in previous years.

UPS published its new prices on Friday, with basic ground rates going up 5.9%, but fuel surcharges coming down a point to bring about a net 4.9% increase. UPS air express and international rates are rising by 6.9%, but an accompanying 2-point decrease in fuel surcharges will also see a net 4.9% rise.

FedEx said in September it would be raising express rates by a net 3.9% from January 2. It is yet to release details on ground rate increases.

USPS is currently seeking a bigger slice of the parcel market as one of its four key priorities to increase revenues and help restore financial stability. Although its overall losses are spiraling, its competitive products are performing well, with the 12 months up to September seeing a 6.7% growth rate in revenues, growing $530m to $8.5bn for the year.

Innovations

Building on its success in competitive products, USPS also revealed yesterday that it is launching a number of new services for mailers, including a “Package Intercept” service that will allow mailers to request mail be intercepted before final delivery it attempted, for return to shipper, redirection to an alternative address or for collection at a post office.

Another new product comes on the back of the huge growth in flat-rate Priority Mail boxes, the Postal Service is now launching a new Express Mail Flat Rate Box, allowing customers to ship an item overnight to anywhere in the country for one price, regardless of weight.

The new product has a 70-pound weight limit, and will be priced at $39.95.

Paul Vogel, the president and chief marketing/sales officer at USPS, said: “The introduction of the Express Mail Flat Rate Box leverages the success of our Priority Mail Flat Rate advertising campaign and further positions the Postal Service as the best value in the shipping business.”

USPS already has a flat-rate Express Mail envelope, which will have a price of $18.95 from next year.

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