The U.S. Postal Service announced its rate increases for all shipping services and the average rate increase will be 4.6%, effective Jan. 22, 2012.
Priority Mail prices will increase an average of 3.1% and Express Mail prices will rise 3.3%. The Postal Regulatory Commission will review the prices before they become effective.
Gerard Hempstead, president of consulting firm Hempstead Consulting, says parcel pricing for the USPS is what is called a competitive product, and by that definition is not constrained by the same rules and regulations for the market dominant products. “There is no ceiling by which they are constrained when it comes to increasing price.”
“I took a customer of mine and ran their profile through the retail priority mail rate change,” Hempstead says. “Their increase was 5.2% on a very large statistical sample spanning all weights from 1 to 70 lbs. and zones. That’s pretty tolerable all things considered but still significantly higher than the amount the cost of living rose over the last 12 months. I will argue that the USPS needs the money because it, as an enterprise is losing a lot of money and they need to restore the balance sheet to its congressional mandate of breaking even.”
The greatest tool the USPS has, Hempstead says, is its flat rate container rates. “They added a new size to the menu of regional flat rate options and they have introduced a flat rate Express Mail option. The flat rate products is where almost all the growth is coming from for the USPS because there is a predictable price, no fuel surcharge, no residential surcharge, no delivery area surcharges and they provide free packaging. When you fully cost all of those components the USPS plays an important role as an alternative for lightweight ground shipments via the commercial carriers.”
New domestic retail pricing for Priority Mail Flat Rate products include:
- Small box — $5.35
- Medium box — $11.35
- Large box — $15.45
- Large APO/FPO/DPO box — $13.45
- Regular envelope — $5.15
- Legal-size and Padded envelope — $5.30
Commercial base Priority Mail pricing will offer an average 6.8% discount off retail prices for customers using online and other authorized postage payment methods. A new, larger Regional Rate Box C (12” x 12” x 15”) will be added to the existing two sizes. If any of the three Regional Rate Boxes is entered at retail, a 75-cent additional charge will be applied.
New in 2012 is Package Intercept for commercial mailers, available through a customer interface on Business Customer Gateway. For $10.95 plus Priority Mail postage, customers can request mail be intercepted before final delivery is attempted to the initial delivery address. The shipment can be returned to sender, held for pick up at a Post Office, or redirected to an alternate address. Intercepted packages are shipped using Priority Mail.
First-Class Package Service (formerly known as First-Class Mail commercial parcels and now a Shipping Services product) will see an overall price increase of 3.7%. The Intelligent Mail package barcode will provide free visibility to these parcels.