Understanding the USPS Rate Increase

Overview of USPS Rate Increases

The United States Postal Service (USPS) has announced plans to increase rates across several mailing and shipping services starting on January 22, 2024. These rate hikes continue a long-standing USPS practice of incremental price increases to offset rising operating costs.

According to the approved rate case filed with the Postal Regulatory Commission, the average increase across USPS mailing services will be approximately 4.2%. However, price hikes will vary widely depending on the specific mail class and service.

Why Is the USPS Increasing Rates?

USPS says these rate increases are necessary due to rising worker compensation and transportation costs. Inflation and supply chain issues have increased USPS operating expenses considerably. Higher rates help generate the extra revenue to cover these costs.

These pressures also come alongside long-term financial issues for USPS. The agency has posted losses over 13 consecutive years. That has necessitated borrowing from the federal government, leaving USPS with unfunded liabilities exceeding $120 billion.

USPS 2024 Pricing for Different Mail Classes

The USPS has proposed rate increases across several mail classes for 2024. Here is an overview of the new pricing:

First Class Mail: First Class Mail rates will increase by approximately 2.959%. A 1-ounce letter will cost $0.68, up from $0.66.
Priority Mail: Priority Mail rates will increase by an average of 3.960%. The price for a Priority Mail small flat-rate box will be $9.85, up from $9.50.
Priority Mail Express: Priority Mail Express will see an average increase of 3.760%. Next-day delivery to nearby zones will start at $27.10, up from $26.10.
Parcel Select Ground: Parcel Select Ground and Parcel Return Service will increase by 3.899%. These are used by high-volume shippers.

The pricing increases impact both commercial and retail postal customers. Retail customers will see the new rates take effect on January 22, 2024. Commercial pricing will take effect gradually in 2024, depending on the contract renewal date.

Comparing the 2024 USPS Rate Increase With Previous Years

The 2024 USPS rate hike continues a trend of steady price increases over the past decade:

2013: First Class Mail increased by 3.3%; Priority Mail increased by 5.9%
2015: First Class Mail increased by 1.966%; Priority Mail increased by 2.551%
2019: First Class Mail increased 5.9%; Priority Mail increased 5.9%
2021: First Class Mail increased 6.8%; Priority Mail increased 7.5%

The 2024 increases are higher than the general rate of inflation. The USPS cites rising worker compensation and transportation costs as reasons for the above-inflation increases.

Specific Increase Rates for International and Domestic Mail

In addition to market-dominant products like First Class and Priority Mail, competitive products like Priority Mail Express International will also see price hikes:

Priority Mail Express International: 11.627% increase
Commercial ePacket Service: 36.137% increase
First-Class Package International Service: 2.944% increase
Inbound Letter Post: 1.641% increase

Domestic shipping services will increase at lower rates compared to international delivery options. However, the USPS wants to raise more revenue from international mail and packages to help fund domestic operations.

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Tips For Adapting to the USPS Rate Increase

Adapting to the latest USPS rate increases is a challenge for many businesses. Partnering with a company like Presort is the best approach for finding ways to lower your mailing costs. Others tips include:

Review Your Postal Spend

The first step businesses should take is to closely analyze current postal and shipping spend. Understanding your existing USPS expenses will allow you to forecast how rate changes will impact your budgets.

Leverage USPS Commercial Rates

Many business services offered by the Postal Service provide discounted commercial rates versus published pricing. Options like USPS Commercial Base Pricing and Commercial Plus Pricing offer steadily increasing discounts based on your annual USPS spend. Commercial prices also rise slower than standard rates.

Shift to Digital Communications

Reduce reliance on mail by shifting both external communications and internal operations to digital channels. The cost to store and deliver digital communications is significantly lower.

Right-Size Packages & Mail Pieces

Evaluate if you can resize, consolidate, or reconfigure mail pieces and packages shipped to align better with USPS pricing thresholds. This may mean shifting from a padded envelope to a smaller envelope size that qualifies for letter rate or optimizing box-sizing to inch under a dimensional weight pricing increase. Taking advantage of postal rate tiers by even slight size adjustments can drive savings.

Leverage Automation for Discounts

Postal discounts are available for mail pieces that are pre-sorted and containerized or which utilize USPS tracking barcodes. While automation requires some upfront investment, the discounts often provide an attractive return on investment. Address validation services also reduce returned mail rates.

Compare Rates Across Carriers

The USPS does not have a monopoly on delivery services. Make sure to periodically benchmark USPS shipping, package, and freight costs against other carriers. While the Postal Service is hard to beat on letter mail, UPS, FedEx, and Amazon rates can be very competitive for parcels depending on timelines, dimensions, and drop off/pick up logistics.

Manage USPS Rate Increases With Presort

The latest USPS rate increases make efficiency key for preventing cost overruns. The Presort team offers seamless mail services for our clients that eliminate in-house operational costs and accurately group mail with intelligent barcoding.

Partnering with us allows our clients to lower their spending and simplify their marketing mail processes. Contact us today to learn more about our letter, parcel, and certified mail solutions.