USPS to raise shipping rates 3.4%, but rules out dimensional pricing

The US Postal Service has proposed a 3.4% average price increase for its competitive shipping products from April 26, 2015. The submission to regulators said prices would increase 8% for the bulk ground shipping product Parcel Select, while the service formerly known as Standard Mail commercial parcels, now Parcel Select Lightweight, will see rates increase by 9.8%.

But, in a bid to take market share from private sector rivals FedEx and UPS, the Postal Service said it would be keeping its domestic Priority Mail and Priority Mail Express shipping rates the same — both for retail and business customers.

And, unlike FedEx and UPS, the Postal Service will not be introducing dimensional weight pricing, keeping its prices based on weight alone, instead of including the volume of items within price calculations. The move would benefit shippers of lightweight items, for example in the e-commerce business.

USPS told the Postal Regulatory Commission that if approved, its price increases would bring in an extra $310m in revenue this year.

The Postal Service said the strategy was designed to “capitalise on strong package growth”.

“Priority Mail is the Postal Service’s flagship Shipping Services product and is a convenient and fast way to send documents and packages requiring expedited transportation and handling,” USPS said.

“Unlike other shipping companies, the Postal Service is not implementing new dimensional weight charges with this pricing proposal, continuing its commitment to deliver the best value for customers.”

FedEx and UPS introduced dimensional weight pricing for all ground shipments from the start of January 2015, having previously applied it to larger and express shipments. The move to price items based on the space the package occupies within transportation aims in part to improve the profitability of lightweight e-commerce parcels.

Among other price changes, the US Postal Service said its Parcel Return Service prices will go up by 4.8%.

First Class Package Service prices will rise by 5.1%, but if the regulators allow the Postal Service to transfer it to the competitive products portfolio, retail prices could rise by as much as 22%.

International rates

The Postal Service said that among its international products, Global Express Guaranteed rates will rise by 7.2%, Priority Mail Express International prices will rise by 6.7%, and Priority Mail International rates will rise by 5.5%.

The Postal Service is bringing in new zoned prices for items shipped by Priority Mail International from the United States into Canada, with prices based on where the item is shipped from. Other changes include a rise in the maximum weight for items going to the Netherlands, to 66lbs.

International Priority Airmail and International Surface Air Lift will see prices rise by 4.5%, with Airmail M-Bags up 6.8%.

First Class Package International Service rates will rise by 7.2%.