Shipping costs are a major expense for many businesses, and the recently announced USPS rate increases will further increase costs. In this blog, we’ll explore the details of the increase and offer tips for adapting to them.
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.
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.
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.
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.
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.
Presort is a leading provider of logistics solutions. Check out more about the mailing serviceswe offer and learn how our team can help with your next project.
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:
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.
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.
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.
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.
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.
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.
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.