USPS Files 2020 Rate Hikes for Review

October 16, 2019


On September 17th, FedEx offered us a view of what most of their 2020 rates will look like and now the USPS is doing the same, pending approval by the Postal Regulatory Commission.

While the USPS is increasing rates, they are lower increases versus what we saw last year. Good news for those of us that still use snail mail is that the price of a first-class stamp isn’t changing. However, the prices for flat-rate Priority Mail packages are going up. If approved, the prices, would rise by about 1.9% overall. The average Priority Mail Express price would increase 3.5%, and Priority Mail would increase by 4.1%, according to the USPS.

An interesting move, particularly as UPS quietly rolls out its own version of flat-rate packages. Stay tuned for more on this topic when we discuss UPS 2020 rates (when they are published) in our next podcast event with Supply Chain Now Radio.

The USPS is in a tough situation. The number of packages it delivers is declining. For the quarter ending June 30th, it delivered 3.2% fewer packages. Revenue from packages rose 4.8%, however, from a combination of higher prices and growth among package options like Priority Mail and First-Class Packages.  According to SME CEO John Haber, “While the lower annual rate increases are good news for shippers, it’s hard to understand why larger increases are not being implemented given the USPS’ financial condition.”

Most of the volume declines may be attributed to FedEx moving a portion of its hybrid solution, SmartPost, back into its network as a cost-savings/time to delivery initiative while UPS and Amazon are also keeping more volume in their own respective networks for delivery.

Meanwhile, USPS is planning another rate increase later in 2020 when it will be able to increase rates charged for cross-border packages. Just last month, the UPU granted the USPS the green light to do this in order to keep the U.S. in the international organization. Other large volume postal organizations around the world will follow suit in setting their own rates beginning in 2021. According to a Supply Chain Dive article, the U.S. must submit self-declared rates for validation by March 1, 2020, and those rates will be published by April 1, 2020, then go into effect July 1, 2020. New rates will initially be capped at 70% of domestic rates with the option to increase 1% every year up to 80%.

This UPU change will also benefit the integrators, DHL, FedEx and UPS thus attracting more volumes away from the USPS.

Faced with mounting financial losses thanks in part to pension payment requirements, will 2020 be the year the USPS buckles?

For more on the USPS 2020 rates, click here. If approved, rates will go into effect on January 26, 2020. As always, please contact us if you would like to know more about how the rate changes may impact your operations.

 

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USPS Files 2020 Rate Hikes for Review

October 16, 2019


On September 17th, FedEx offered us a view of what most of their 2020 rates will look like and now the USPS is doing the same, pending approval by the Postal Regulatory Commission. While the USPS is increasing rates, they are lower increases versus what we saw last year. Good news for those of us that still use snail mail is that the price of a first-class stamp isn’t changing. However, the prices for flat-rate Priority Mail packages are going up. If approved, the prices, would rise by about 1.9% overall. The average Priority Mail Express price would increase 3.5%, and Priority Mail would increase by 4.1%, according to the USPS. An interesting move, particularly as UPS quietly rolls out its own version of flat-rate packages. Stay tuned for more on this topic when we discuss UPS 2020 rates (when they are published) in our next podcast event with Supply Chain Now Radio. The USPS is in a tough situation. The number of packages it delivers is declining. For the quarter ending June 30th, it delivered 3.2% fewer packages. Revenue from packages rose 4.8%, however, from a combination of higher prices and growth among package options like Priority Mail and First-Class Packages.  According to SME CEO John Haber, “While the lower annual rate increases are good news for shippers, it’s hard to understand why larger increases are not being implemented given the USPS’ financial condition.” Most of the volume declines may be attributed to FedEx moving a portion of its hybrid solution, SmartPost, back into its network as a cost-savings/time to delivery initiative while UPS and Amazon are also keeping more volume in their own respective networks for delivery. Meanwhile, USPS is planning another rate increase later in 2020 when it will be able to increase rates charged for cross-border packages. Just last month, the UPU granted the USPS the green light to do this in order to keep the U.S. in the international organization. Other large volume postal organizations around the world will follow suit in setting their own rates beginning in 2021. According to a Supply Chain Dive article, the U.S. must submit self-declared rates for validation by March 1, 2020, and those rates will be published by April 1, 2020, then go into effect July 1, 2020. New rates will initially be capped at 70% of domestic rates with the option to increase 1% every year up to 80%. This UPU change will also benefit the integrators, DHL, FedEx and UPS thus attracting more volumes away from the USPS. Faced with mounting financial losses thanks in part to pension payment requirements, will 2020 be the year the USPS buckles? For more on the USPS 2020 rates, click here. If approved, rates will go into effect on January 26, 2020. As always, please contact us if you would like to know more about how the rate changes may impact your operations.  

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