Small Parcel Shippers Shocked by USPS Rate Hike

Catalogers Got Off Relatively Lightly with the 2.3% average rate hike standard mail flats that takes effect next month. But rates for Standard Mail parcels (those weighing less than 1 lb.) are increasing an average of 16%, which could have a huge impact on merchants that sell small items.

“The rates for parcel delivery services for Standard packages are increasing at rates far greater than inflation and what was reported for catalog mailings,” says Louis Giesler, president of AmeriMark Direct, a marketer of apparel, accessories and health products.

“Our largest volume in this category comes from the machinable pieces” whose rates are increasing nearly 20%; the other categories (irregular parcels) are going up about 14%, he says.

Giesler points out that the increases follow a 35% rate increase for this category in 2007, and a 10% increase last May. “And these increases will have a significant impact on the many catalogers and other businesses that ship packages that fall into these categories.”

More than 50% of the items Ameri-Mark ships fall into the Standard Mail parcels category, Giesler says. “So we’re going to have to cut back and sharpen our pencils on our circulation plans.”

AmeriMark doesn’t want to pass the increased cost of shipping on to its customers, but it might have to, Giesler says, which is not good for business. Shipping and handling fees are sensitive charges, he notes, “and we often meet resistance when we try to increase those.”

Ed Weiss, general manager for Movies Unlimited, says the U.S. Postal Service’s small parcel rate hikes haven’t been as regular as other services, but they are catching up. His catalog uses USPS Media Mail, a service for shipping bulk bound books, DVDs, CDs and so on. USPS Media Mail rates are increasing about 7%, he says.

“For the time being, we will eat it,” Weiss says of the increase. “But we will have to look at raising our shipping rates sometime later this year.”

Miles Kimball uses the Federal Express SmartPost service for most of its parcels, says president/CEO Stan Krangel. But the gifts cataloger does ship about 1.4 million small packages via USPS.

“Our USPS rep has quoted anywhere from a 7% to 10% increase, depending on how deep we perform the postal bag sorts,” Krangel says.

“All in, our postage is going up over $500,000 over last year in real dollars,” he says.