What You Need to Know About the Recent USPS Rate Increase

 In Ecommerce, USPS

On November 10, 2021 the USPS filed notice with the Postal Regulatory Commission (PRC) of shipping changes that would take effect on January 9, 2022.

According to the USPS, the reason for the rate change is over the past 10 years: mail volume has decreased by 46 billion pieces or 28%. Within the same time frame, First Class-Mail has decreased by 32%- and single-piece First Class-Mail – including letters with a postage stamp has dropped 47%.

In a statement issued by the USPS, they claim the Postal Accountability and Enhancement Act (PAEA) of 2006 has had a negative impact and caused financial harm to the postal service. The USPS has had limited control of pricing due to a cap which prevented the postal service from adjusting rates for inflation, national wage, operating costs and the need for leveling prices with those of USPS competition.

These increases have been proposed under the “Delivering for America,” the U.S. Postal Services 10-year plan to reach financial sustainability, high quality service and give the postal service the ability to be more competitive.

USPS Goals of Rate Change

  • Rate changes will contribute to $40 billion in investments in people, technology and infrastructure improvement over the next 10 years.
  • Full implementation of rate increases is expected to reverse $160 billion in operating losses over the next 10 years.
  • USPS Connect Local – New added service providing same day or next day delivery to local addresses by the local post office. The service is being trialed in Texas already and is expected to be released throughout 2022. The USPS also intends to test another service called USPS Local Mail Connect – offering flat pieces delivery for $2.95.

New Fees

  • Fees for missing or incorrect dimensions: USPS is proposing a fee of $1.50 on Priority Mail Priority Mail Express and Parcel Select services that are larger than one cubic foot or a length over 22 inches if the shipper did not provide the dimensions or if the dimension information is incorrect.
  • New Nonstandard Fees: Proposed new fees for Priority Mail, Priority Mail Express, Parcel Select, First Class Package Service and USPS Ground for manual sorting when dimensions of packages exceed the normal package requirements:

    Package length over 22’’            $4.00

              Package length over 30’’            $15.00

              Package length over 2 cu. ft.     $15.00 

Rate Percentages

Note: All proposed rate alterations in pricing is based off of 2021 base prices and NOT current peak season prices.

Priority Mail (3.1% average)

  • Retail (2.9%)
  • Commercial Base (4.9%)
  • Commercial Plus (4.3%)

Priority Mail Express (3.1% average)

  • Retail (4.5%)
  • Commercial Base (2.7%)
  • Commercial Plus (1.2%)

First Class Package Services (7.6% average)

  • Retail (8.4%)
  • Commercial (7.4%)

Proposed domestic Priority Mail Flat Rate Retail price changes would be:

Product                                                         Current                                              Proposed Change

Small Flat-Rate Box                                           $8.45                                                         $9.45

Med. Flat-Rate Box                                           $15.50                                                       $16.10

Lg. Flat-Rate Box                                               $21.90                                                       $21.50

APO/FPO Lg. Flat-Rate Box                             $20.40                                                       $20.00

Reg. Flat-Rate Envelope                                  $7.95                                                         $8.95

Legal Flat-Rate Envelope                                 $8.25                                                         $9.25

Padded Flat-Rate Envelope                             $8.55                                                         $9.65

Final Thoughts

Most proposed price changes seem to follow suit of other price adjustments made by UPS, FedEx and DHL. These prices have not been approved yet, but are set to become active on Jan. 9, 2022. Final details should be expected to be released by the USPS later this month.