The Postal Service proposed new prices for their competitive products that, if approved, will go into effect on January 17.
Unlike a price change for “market dominant” prices like First-Class Mail or Standard Mail, USPS is not required to limit increases to within the Consumer Price Index (CPI). So what’s changing? Let’s dive in to the details.
Priority Mail and Priority Mail Express
This rate change is all about simplification. The biggest change in Priority Mail will be the beginning of the end for Commercial Plus pricing. The Commercial Plus prices for both Priority Mail Express will be raised to match the new Commercial Base prices, an increase of over 48 percent. For Priority Mail, the Commercial Plus rates will be within three percent of the Commercial Base prices, with an ultimate goal of eliminating the Plus rates in 2017. Other categories, such as the Priority Mail Express Flat Rate Box, will be eliminated in 2016. While the Priority Mail and Express options will go up an average of 9.8 and 15.6 percent, the Commercial Plus increases will hit frequent shippers the hardest. USPS did note that mailers can request additional discounts through a negotiated service agreement, the process will hinder many volume shippers who currently enjoy these lower rates.
Parcel Select
In addition to renaming Parcel Select Nonpresort to Parcel Select Ground, non-Lightweight Parcel Select will receive a small 3.1 percent price increase. However, the Lightweight category of Parcel Select will get a whopping 23.5 percent increase. This will be a hard hit for parcels that were categorized as Standard mail less than five years ago.
First-Class Package Service
Continuing the simplification, the 3-digit, 5-digit and ADC sort levels for First-Class Package Service will be eliminated, along with Commercial Plus pricing. This will result in a 12.8 percent increase on average.
Standard Post
To better match equivalent services from FedEx and UPS, Standard Post will be renamed Retail Ground, and prices will increase ten percent.
International Expedited Services
Continuing the theme, Commercial Plus prices for International Expedited Services will be raised to match the Commercial Base price, effectively eliminating the rate. Global Express Guaranteed (GXG) will increase 7.1 percent, and Priority Mail Express International (PMEI) will go up 11.6 percent.
Priority Mail International (PMI)
The overall increase for International Priority Mail will be 10.2 percent, again with the consolidation of Commercial Base and Commercial Plus prices. The PMI Regional Rate Box C will be discontinued due to low customer usage.
International Priority Airmail, International Surface Air Lift (ISAL) and M-Bags
These prices will have a modest increase of 3.5 to 6.3 percent, while Airmail M-Bags will increase 9.2 percent.
First-Class Package International Service
And rounding out the International prices, First-Class Package International Service will increase 21.6 percent, including the consolidation of Commercial Base and Commercial Plus prices.
While the price increases for competitive products may seem steep for those of us more familiar with the market dominant CPI-capped rates, many of the rate changes for parcels this year are quite modest. In an announcement to the industry, USPS noted that the rates for Priority Mail hadn’t been increased in three years, making this year’s 9.8 percent bump average to 3.3 percent per year. Regardless, the increase in Commercial Plus pricing to match Commercial Base indicates that USPS is less interested in bulk parcels, and more interested in making the most revenue from the parcels shipping today.