August 27, 2016

USPS Shipping Rates (Priority Mail) Shoot Up by Over 8 Percent


postal jeep

The U.S. Postal Service has revised prices for its Shipping Services. The rate changes went into effect on Jan. 17, 2016 and are the first price increase in more than three years for commercial Priority Mail.

In 2015, UPS and FedEx boosted shipping rates for many customers — including small businesses.

Pitney Bowes, a supplier of global eCommerce solutions and shipping and mailing products, believes the changes mean small business shippers must begin thinking in new ways.

“The one guiding principle that all small businesses should observe for their sending is to look at the data to select the best carrier mix,” Jeff Crouse, Vice President at Pitney Bowes told Small Business Trends in an email interview. “By analyzing their data on delivery performance and cost, they can ensure the right packages are sent via the right carrier.”

“Taking a multi-carrier approach allows even small businesses to maximize their shipping dollars while meeting their specific delivery requirements,” he added. “Don’t fall into the trap of using one carrier for all parcels. Each carrier has its strengths and playing to those strengths will allow small businesses to win big.”

Notably, the price changes do not affect First-Class Mail or any other Postal Service Mailing product such as the Forever stamp.

Price Increases at a Glance

Following is a summary of some of the increases likely to affect small businesses.

  • Overall, the Priority Mail Express service will see a 15.6 percent price increase.
  • The average retail price of Priority Mail Express will be increased by 14.4 percent.
  • The Priority Mail Express Flat Rate Box will be discontinued because of low volumes.
  • Overall, First-Class Package Service prices will be raised by 12.8 percent.
  • Standard Post will be renamed Retail Ground, and prices will go up by 10 percent.
  • International shipping prices will increase as well with Global Express Guaranteed (GXG) and Priority Mail Express International (PMEI) being raised by 7.1 percent and 11.6 percent, respectively.

More information on the price hike can be found at the Postal Regulatory Commission website (PDF).

Concerns to Consider for Small Business

In addition to this, Pitney Bowes noted significant increases at the other big carriers in recent years that might also be of concern.

  • On Dec. 28, for example, UPS Ground Services saw a 4.9 percent hike while UPS Air and International Service went up 5.2 percent
  • Also, on Jan. 4, FedEx implemented a 4.9 percent increase and its new “dimensional weight” pricing model which in many cases also translated to higher costs.
  • Meanwhile, FedEx also raised its Home Delivery service from $2.85 to $3.00 and Ground Home Delivery from $2.90 to $3.10.

Crouse suggested several important changes to make in your business’s shipping strategy to compensate.

“First, match your shipping strategy specific to your customer and business needs,” he suggested. “That way, you can select the right carrier for each parcel based on a host of factors, including delivery requirement, cost and value. In other words, don’t put all of your eggs in one basket.”

Second, Crouse suggested small businesses must leverage technology.

“There are new cloud-based sending solutions coming to market that are scaled specifically for small businesses to help simplify their shipping operations and gain greater control and visibility into their true cost of sending,” he said.

“My third recommendation is to eliminate wasted space,” Crouse added. “Carriers use Dimensional Weight Rating on parcels, which can have a dramatic effect on the shipping cost. Outer packaging should consist only of what is necessary to properly secure the enclosed items and provide protection during transport. Don’t ship small items in a big box or you will overpay big time!”

The company has also put together a video overview of changes in the new USPS shipping prices:

Other companies working with small businesses have also weighed in.

In a recent post on its website, eBay told merchants:

“We fully understand the impact changes like these can have on your business. Rest assured that we will continue to work directly with the USPS — and all our shipping providers — to keep shipping rates low. In the past, we’ve been able to leverage the shipping volume eBay sellers generate to secure great discounted rates.”

U.S. Postal Service Photo via Shutterstock

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Shubhomita Bose


Shubhomita Bose Shubhomita Bose is a Staff Writer for Small Business Trends. She covers key studies and surveys about the small business market, along with general small business news. She draws on 8 years of experience in copywriting, marketing and communications, having worked extensively on creating content for small and medium sized enterprises.

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35 Reactions

  1. Bump the retail price and negotiate more on pricing to bulk shippers. For an entity that has taken a loss for years it’s probably a smart move. For SMBs on thin margins it hurts a lot.

    • Aira Bongco

      It hurts especially if the business is dependent on the service to begin with. It may be small but it all adds up. I wish there are discounts.

  2. A lot of my business is abroad so this so the international rate hike is killing me!

    • The new international rates are absolutely INSANE! Before the recent rate hike, a 3 lb, 4 oz package going from the US to Japan would cost $33.40. It now costs a rediculous $50.75!! If my math is correct, that is more than a 50% increase in price. 50%! I just love the way that the post office is not advertising those rate hikes…only the ones that have increased by 10% or less ever get mentioned by them. Thank you, USPS, for killing my international sales.

      • There is another very serious problem with USPS. For many years the USPS has been lying to merchants regarding its delivery performance with Priority Mail. They claim that they can ship anywhere in the USA within 3 days or less. In far too many cases it just doesn’t happen. Priority Mail is a total waste of money. You get about the same results with regular first class mail.
        I recently ordered an item from New Zealand which is not widely available in the USA but I definitely need it. I paid a premium on shipping to get it to San Angelo, Texas as soon as possible. That proved to be a waste of money. There was no problem with DHL shipping time from New Zealand to Austin, Texas. The product was reshipped with Priority Mail at Austin Texas. If USPS cannot get the parcel to move 205 miles in 4 days there is something very seriously wrong with their service. When I did internet tracking on the package I was outraged. These idiots at USPS first took the package to Houston, Texas which is nearly 400 miles from San Angelo, Then they took it Ft. Worth Texas which is 270 miles away. Makes absolutely no sense.
        Instead of using USPS Priority Mail you are probably better off using FEDEX Ground which has much better delivery performance that USPS Priority Mail.

  3. This is really a HUGE price increase. Priority Mail is going up almost 10%. In addition, the USPS has eliminated the discount for purchasing online! It appears they have eliminated the Priority Mail Regional Rate Boxes, too. So, if you were purchasing postage online, you will be hit with a 20% increase!

  4. Well. Adios to my business. F you Ebay and USPS! How are you gonna go from charging 2.05 to 2.60!!!! FOR THE SAME 3 OZ WEIGHT. This is COMPLETE BS.

    • International bubble mailer that cost 6.39 now costs 13.75! This will most likely kill our overseas customers buying from us.

  5. Almost a buck more for the small Flat rate priority boxes. More loss in profits for the little eBay seller.

  6. I have received about 4 packages as a buyer, the shipping was through Pitney Bowles . I owed money for postage due according to USPS. Hopefully the postage will now be correct when I buy again and Pitney Bowles is used for shipping.

  7. A flat document envelope from US to South America today just went from around $12 to $22.50. That is almost double. Even my post office manager was stupified. That’s the end of any foreign commerce for me.

  8. Shubhomita Bose

    Thanks everyone for your comments. Here’s hoping USPS takes note of this and realizes leaving small businesses disgruntled is a costly mistake.

  9. I’m not sure where the average of 8.6% on Priority Mail comes from because as far as I can see almost every size option was increased by almost 20%. A padded flat rate envelope used to cost $5.70 online and is now $6.80, what other business would get away with hiking up their prices 20%? Inflation and average wage increases are no where near this. And why has the online discount been discontinued? It saves the post office time and money if more small business’s purchased and shipped using pre-ordered supplies and paid online, no clogging up their customer lines, just a straight drop off. This is a bitter pill to swallow indeed!

    Oh and Ebay – the Global Shipping Program between the UK and USA is awful – just awful. It’s excessively expensive and takes weeks longer to receive items. There is ample tracking between USPS and Royal Mail so I don’t see why a third party needs to be paid excessive additional fees for simple transactions and items which would incur no import duties? Perhaps between countries who do not have as secure or robust local mail providers this would be helpful, but between these two very secure mailing systems, it’s a croc. I wish more Ebayers would boycott it!

  10. Martin Lindeskog

    Another example why the state shouldn’t be involved in business. I am glad that we have competition in the shipping field nowadays.

    I wonder how these increases will hurt e-commerce and exporting to international customers.

  11. Most people don’t realize that UPS offers discounts for small businesses (9% for ground and 18% for air and intl. There’s no minimum volume required, it’s free to sign up for, and in many cases the rates are cheaper than USPS. It’s definitely worth checking out, especially now that USPS just jacked up their rates.

    [Edited by Editor]

  12. I don’t know what you people are talking about. Fist class international has gone up almost 100%. it was first $1.23 with no tracking then it went up to about $2.50 the 5.48 not it’s $10.91 for two ounces. The fricking post office will out tracking # on incoming Chinese packages at our expense!

  13. Yeah this price hike is outrageous. Last month it cost $7.10 to ship a 1 oz package to Australia…now it costs $13.75! I am going to lose a lot of international customers because of this. And because my merchandise is so light both UPS and FedEx are still more expensive. Last year they raised the international rate about $1 which was understandable…but to raise it to over $6 more?? I was in total shock at the post office today realizing that my small business is going to take a huge hit from this.

  14. With increasingly dismal delivery performance, reductions in staff and service, double-digit pricing increases, the elimination of online purchasing discounts, and the closing of the nearest regional processing center (mandating mail now travel 350 miles round-trip, to be delivered here in town!).. this will effectively eliminate the USPS as a viable alternative for ANY of our shipping needs – PERIOD!

    If ever a business was determined to kill itself, the USPS is the quintessential example!

  15. This is insane. I tried to ship a small package within the same county that I live in…before it was $5.65 and now it’s $9.45!!!! That’s WAY more than a 10% increase. At that price, it’s easier for me to deliver it myself. And with gas prices so low, I find these new prices ridiculous. Not to mention that from a customer service perspective, it’s way easier dealing with FedEx or UPS. Goodbye, USPS. It was nice shipping with you!

  16. I guess the rate hikes will help cover the horrendous service we receive, and the postal carrier who deliberately tampers with my mail as payback for my complaints about her. Time for UPS.

  17. End Corporate Rule

    Fully one third of my packages will not be shipped out due to this insane increase. Some prices are doubled and all the priority envelopes went up $.65 each!
    What is this 10%-14% increase crap. We don’t care what kinda con job rate hike corporations blab about: WE care about the amount it costs us. THE TOTAL COST to ship has increased by up to 100%!!!!!!
    I spend over $15k each year shipping through USPS. They can drop that amount to $10k right now because I don’t ship packages to pass the time. If I don’t make money then I won’t ship.

  18. With elections coming up, people should try to understand why this is happening. To attract voters, the government has increased hiring, wages and benefits to all level of employees. We tax payers are paying for it, then we’re paying for it again in the higher rates which have been increasing stubstantially over the last seven years especially. Government can’t even fund it’s retirement programs. These programs are in the “red” big time and again, tax payers are paying for it. Just think about it, get a government job and for practical purposes you can’t be fired, so many of the employees are not productive (I’ve seen it personally), articles are out there where government employees spend substantial business time on the internet (watching porn, etc.) and they have all kinds of excessive benefits. It will never change unless we get an administration in Washington that is not into buying votes by promising more, more, more. In simple terms, the middle and lower classes in this country do not have a chance as long as fewer and fewer people are working to fund the larger and larger, unproductive people in this country. And, politician want us to believe that they can continue to tax the “rich”. Think about it, most rich people are rich because the know what they are doing. Over tax them and they will close unproductive businesses, move somewhere else and one way or another figure out how not to keep paying higher taxes. the result is fewer jobs and a continued poor economy. Then the burden will continue to fall on the productive and successful middle class and the poor. It just will not work, cost of living keeps going up and eventually the US will more and more resemble third world countries and at the same time we keep bringing more and more immigrants that add to the poor, create fewer and fewer jobs and again, higher taxes to cover all of the expenses. The US Post Office is just one of the agencies that can not raise rate fast enough to even fund past retirement benefits and they are still losing money. It’s never ending.

    • Nonsense.

      USPS receives no taxpayer money. It is an independent agency, authorized by the Constitution of the United States, and is entirely funded by its revenues.

      However, it is subject to congressional oversight and mandates including the mandate to provide equal service to all. It cannot therefore operate as yet another business.

      So its users have to pay for it. Isn’t that what you want? Otherwise you become one of the “larger and larger, unproductive people in this country.”

      I visit my local PO almost every day, and all I see is a small staff working very hard. No one is surfing the Internet.

      Oh, and those retirement benefit funding levels? Also mandated by Congress.

      • The poster you replied to was right.

        Tax-funded jobs in general are full of people who do nothing productive. Some post office somewhere doesn’t invalidate his points, no matter how hard they *happen* to work there.

        How can USPS charge these absurd rape-rates? Imagine McDonald’s jacking up the price of a Big Mac to $30 a pop. Do you think that would have highly negative consequences for their business?

        Postal service is just one of those government-maintained monopolies and cartels that are used to fleece you at every turn.

        Ever wonder how Comcast can get away with being Comcast? -It’s because the government makes sure they have no *genuine competition*. Sometimes there’s simply no alternative.

        Think about it. The government is not your friend. They kind of prove that to you by taking your money by force each year. First they trained you to think you have a moral obligation to give them money, of course, because otherwise you’d see it for the extortion it is.

  19. Priority Mail Flat Rate envelopes were perfect for me because I didn’t have to weigh each individual package and customize the invoice. I have a full time job and don’t have the time for that. The rate increase is absolutely ridiculous. Plus it looks my occasional Medium Flat Rate Boxes are going away too. This is a crisis!

  20. The USPS Economy shipping rates are not much better. It’s killing Ebay sales! I won’t even purchase an item that’s a bargain when I get a look at those shipping quotes.

  21. I agree with those that feel some of the increases were 40 or 50 percent. I just shipped a box to my home in Florida from the Buffalo, NY area and I’ve done this many, many times before for no more than $23 and the weight of this box was about 10 pounds(lower than my normal). When the clerk said $33.50(6-7 day ground), I said that their recent price was excessive and I would have to reconsider using UPS. He said they too raised prices and added I should do what I have to do with regards to alternatives. I’m sure this is an attempt to shore up pension payments and reduce their deficit but I for one will not be ripped off without looking for relief.

  22. Its now cheaper for us to ship most of our packages using FedEx and UPS because of the USPS rate hike, especially the international. And yes their rake hike is OVER 50% for international stuff, we ship excess of $20K per year. Congratulations USPS for putting another nail in your own coffin. What good is a price increase if your customers choose another carrier. I could double our prices too, but I dont want to give my customers a reason to purchase at the competition and put myself out of businesses. Pricing USPS near or above FedEx and UPS rates make it a no brainer, since those carriers are a million times more reliable anyway.

  23. The post office people are scumbags. 15% increase my a$$. 1oz packages were $1.23 then $ 2.48 then 5.48 now almost $12.00 yet they will put tracking numbers on Chinese junk flooding the country at my expense. The game is rigged folks to shut down the economy.

  24. Great post–very encompassing! I have found that shipping rates can vary tremendously depending on the shipping company (USPS, UPS, FedEx, DHL, TNT, etc). There are too many factors to consider such as weight/dimensions, fuel surcharges, remote area fees and the international destination. However, when in doubt i use ShipBrain to compare international shipping rates from USPS, UPS, FedEx, DHL, TNT . Usually I’m surprised to see who is the cheapest or the fastest. Very cool tool.

  25. Prior to 2016, my eBay international sales were approximately 10-15% of my total sales volume. I have shipped to over 75 countries over the last three years. Since January of 2016, I’ve had exactly 2 items sent “overseas”, to Canada! I used to be able to mail a shirt for $12-14, now it’s pushing $30. WTF? fuel prices have dropped, so shouldn’t the postage? Using the Global Shipping Plan is convenient, and I like the no-hassle of filling out customs slips, but it’s not making a difference. And as bad as USPS rates are, UPS, FedEx and DHL are even worse. So long international sales. eBay, have you noticed?

  26. My small flat rate on a 6×9 small flat went from $5.00 to $6.45

    You guys are getting a good deal on the increase.

    Hal

  27. Pitney Bowes is behind Ebay’s Global Shipping Program, which saw shipping prices increase 300% a few years ago.

  28. I have recently received a few packages via priority mail via USPS. Now they all have Pitney Bowes labeled on them. This was a domestic US shipping, not Global. What gives? The seller on ebay does not mention or have pitney bowes/global mailing service on the listing. Pitney bowes service repackages items and then sends them off to the buyer, 90% of items are damaged/stolen during this repackaging process. Besides this, it is illegal to open other peoples mail to begin with, so how is this pitney bowes federally legal to exist? and how can i request that my mail is not shipped via pitney bowes? I am under the understanding that my packages are being shipped USPS Priority, not by pitney bowes… Help!

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