USPS announced a general rate increase for shipping services to go into effect January 24, 2021. This year’s changes are announced while seasonal peak volumes are already breaking records. This volume peak is being driven by pandemic-fueled increases in e-commerce that most believe are forever changing buying habits. Consumers will be paying much more for lightweight e-commerce parcels (+19%) but will enjoy mild YoY increases on the packages they mail using the full postal network.

Here are the “shipper-focused” highlights:

· Proposed effective date is January 24, 2021

· Commercial Plus Pricing (CPP) and Commercial Base Pricing (CBP) retain identical rate tables for all services.

· For Priority Mail Express, Priority Mail, Parcel Select, Parcel Return Service, USPS Retail Ground, and First-Class Package Service customers, a $100 fee will be assessed on parcels found in the mailstream that exceed the maximum mailable size limit (combined length and girth greater than 130 inches).

· Priority Mail (PM) 1-5 Lbs. +3%, > 6 Lbs. avg +8.2%, Cubic +7.2% and Regional Flat Rate +3.3%

· First Class Package Services (FCPS) +6.0%

· Economy “Parcel Select” (PS) 1-10 Lbs. increase 5.9% for DDU induction and 7.2% for SCF. Oversize increase is 10%

· Economy “Parcel Select Lightweight” (PSL) less than a pound +18.8% (DDU induct) compare to last year’s +4.5%.

· Parcel Select Ground – Single piece (used for HazMat) increased .4% and is now -4.4% less than PM, many years ago there was a 5% historical delta between Ground and air (PM).

· Media Mail 1-15 Lbs. decreases -4.3% for 5 digit presort while the single piece increases 2.6%.

· Bound Printed Matter (BPM) Flats and Parcels remain unchanged.

· Parcel Return Service (PRS) +4.9% RDU and 5.3% for RSCF Pickup (same as 2020 GRI)

· Key Extra Services: Signature Confirmation +1.9%, Adult Signature and Package Intercept +3.8%

· International Shippers:

o First Class Package International Service (FCPIS) is no longer sharing the same zones as letters and now has 20 pricing zones. Canada +4.1%, UK + 6.5%. Australia +6.3%, Germany and France -1.0%

o Priority Mail International

-- Canada Groups 1.1 – 1.8 +4.7%, Flat Rate Env +6.1%, Flat Rate Pkgs +6.0%

-- Groups 2-17 have changed (now 20) Canada +6.6%, UK + 6.5%. Australia +3.0%, Germany +26.4% and France +10.9%. Flat Rate Env +6.6%, Flat Rate Pkgs +6.9%.

o M-Bag (used by Consolidators) avg +4.7% on both pieces/per LB.

o E-Packet (used by Consolidators) zones no longer line up either; rates consist of both a per piece and a pound charge: Canada +451% increase per piece, UK + 226% on per LB. rate, Australia + +335% per piece and + 5.9% per LB., Germany +465% per piece, France +668% per piece.

2020 USPS Industry Highlights

· Unprecedented political turmoil surrounding the elections. President Trump made significant appointments to the Board of Governors, who put PMG Louis DeJoy into office. With the pandemic, voting for the 2020 elections pivoted in many parts of the country to vote by mail for the first time. PMG DeJoy was hauled in front of Congress to explain his actions that caused severe operational disruptions and delays to on-time performance. Postal workers and the American public rallied to save the USPS and services were mostly restored. Mail played a huge role in what is being regarded as the most secure election in US history.

· All of the national carriers, consolidators, and regionals put limits on, cancelled, or restricted volume going into the final part of the year. This has put intense pressure on the USPS, which has no ability to restrict volumes. Full network USPS (PM, PME and FCPS, + International) is expected to see significant delays. Parcels inducted for final mile delivery by the consolidators should fare better.

· Changes to international pricings, part of the right sizing of rates to counteract the previous imbalance in low USA terminal dues/costs (specifically from China) has made dramatic changes to this sector. Commercial International Consolidators are seeing a large increase in interest as their pricing is now more competitive then ever. Consolidator advantages include: Faster e-commerce transit times, more delivery options (including the ability to prepay duties and taxes), and higher de minimis values.

Here are some of the increases by service broken down by weight and zones.

First Class Package Services (FCPS)

· First Class Package Services (FCPS) +6.0%,

· 1-4 ounces taking a much higher increase, while higher weights and shorter zones are seeing less.

· 5-year cumulative increase remains flat at 25.1%

Priority Mail (PM)

· Priority Mail (PM) 1-5 Lbs. +3%, higher weights avg +8.2%, Cubic +7.2% and Regional Flat Rate +3.3%

· Commercial Plus Pricing (CPP) and Commercial Base Pricing (CBP) retain identical rate tables for all services.

Parcel Select (PS and PSL)

With the explosive growth of e-commerce USPS is enjoying some good news. Given that packages contribute significantly less than First Class Mail it is not going to fix the imbalances in their balance sheet. This growing sector is used by the Consolidators and Amazon to induct their packages. Most will recognize their popular brand names like UPS SurePost, UPS Mail Innovations, FedEx SmartPost, Pitney Bowes Newgistics, International Bridge, OSM Worldwide and DHL SmartMail. Collectively known as “Consolidators”, these companies perform and enjoy “Workshare Incentives” from the Postal Service for: collection, sortation, transportation and deep induction within the USPS network for final mile delivery.

· It is important to realize that Consolidators uses these programs differently, with some offering as many as 3 service levels. It is possible to get 2-3-day transit times and compete with FCPS and PM

· Economy “Parcel Select” (PS) 1-10 Lbs increase 5.9% for DDU induction and 7.2% for SCF.

· Economy “Parcel Select Lightweight” (PSL) less than a pound +18.8% (DDU induct) compare to last year’s +4.5%.

New Beginnings

Shippers will need the patience of Job this holiday season. Shop early and expect to pay more will have to be the new mindset. The new year provides time and opportunity to fine tune your shipping program. When comparing programs in the new year, don’t blame ’20 Q4 service delays on the Postal Service. Going forward, it is always smart to look for savings by examining routing logic, review carrier contracts, and network with industry peers. Savvy shippers understand their distribution profile is unique to them and that rate changes impact each differently. We recommend shippers analyze future impact of all carrier rate increases to get out in front of the changes and mitigate cost increases by shopping. Those that had a diverse carrier mix in place will enjoy the flexibility to minimize holiday surcharges and select the best performing carriers to insure timely delivery. Don’t be afraid to reach out to professionals to help you here. Feel free to reach out to me with questions. Wishing you great shipping success.

Gordon Glazer, CMDSM, CMDSS, MDP, MDC is a Senior Consultant, USPS Specialist at Shipware LLC, an innovative parcel audit and consulting firm that helps volume parcel shippers reduce shipping costs 10%-30%. Gordon is a postal industry veteran with 34 years’ experience and is a sought-after speaker and industry thought leader. He welcomes your questions and comments and can be reached at 858-724-0457 or gordon@shipware.com.