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On January 17, 2016, the U.S. Postal Service® will change many of its service offerings and prices. UPS® and FedEx® also raised rates on December 28, 2015 and January 4, 2016, respectively. This means that online retailers are going to feel the effects of these changes regardless of the shipping carrier they use.

The USPS rate increases may seem drastic at first, but in most cases the USPS is still the best value for online businesses that regularly ship lighter-weight packages.

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The January 2016 price changes represent the first rate increase for commercial USPS Priority Mail® that has taken place in more than three years. So, although the average price increase for Priority Mail looks high at 9.8% for 2016, it averages out to less than 3.3% per year since the last rate increase. And with delivery in just 2-3 days, the USPS offers rates that are still very competitive compared to Ground services from private carriers — which can take up to 5 days for cross-country delivery.

Endicia has put together a quick overview of some of the changes you’ll see with the January 17, 2016 USPS price change:

  • Commercial Plus Pricing (CPP) discounts are being eliminated or greatly reduced to be brought within 3% of Commercial Base Pricing (CBP).
  • A new label layout will be implemented for international labels and for domestic labels that require an integrated customs form (like APO/FPO and U.S. territories).
  • Standard Post™ will be renamed Retail Ground, and Parcel Select® Nonpresort will be rebranded as Parcel Select Ground.
  • First-Class Package Service will support weights up to 15.99 ounces for Commercial Base shippers, versus only up to 13 ounces in 2015.

Here are a few noteworthy domestic rate changes you’ll see in the new year. The information below reflects average changes, so keep in mind that actual costs may vary.

First-Class Package Service (FCPS)

First-Class Package Service Commercial Base pricing will see an average increase of 7.6%, equating to an average of $0.13 more per package. First-Class Package Service Commercial Plus pricing will be eliminated in 2016, but the weight options that were exclusive to Commercial Plus pricing (14, 15 and 15.99 ounces) will now be available to all Commercial Base shippers.

Priority Mail (Zones 1-8)

Priority Mail Commercial Base pricing will see an average increase of 2.4% for Zones 1-8, equating to an average of $1.01 more per package.

Priority Mail Flat Rate®

Additionally, postage rates for Priority Mail Flat Rate boxes and envelopes are going to increase across the board in 2016, with increases ranging from $0.40 to $0.85 per piece.

Priority Mail Regional Rate® Boxes

Postage for Priority Mail Regional Rate Boxes A and B will increase for most zones, while Priority Mail Regional Rate Box C will be discontinued in 2016. Box A (Zones 1-8) will see an average increase of 10.1%, equating to an average of $0.71 more per package. Box B (Zones 1-8) will see an average increase of 5.1%, equating to an average of $0.48 more per package.

Priority Mail Express® (Zones 1-8)

Priority Mail Express Commercial Base pricing (Zones 1-8) will see an average increase of 42.1% equating to an average of $38.36 more per package. Additionally, the Priority Mail Express Flat Rate Box will be eliminated due to insufficient volumes. Priority Mail Express Flat Rate Envelopes will see an average increase of $2.55 per package.

Keep in mind that these changes are only for shipping services. The changes will not affect First-Class Mail® or any other market-dominant USPS product such as the cost of a stamp.

So, what can online businesses do to stay on top of FedEx, UPS and USPS price changes?

It’s crucial that ecommerce businesses start their planning now, before the price changes go into effect. They should develop a clear understanding of their selling and shipping margins, and take a look at the different costs across all shipping carriers.

Online sellers also need to keep in mind that Commercial Base discounts will disappear from the USPS website in 2016. Click-N-Ship® is switching to Retail rates, which means low-volume shippers that move to an electronic postage provider will greatly benefit from the Commercial Base Pricing discounted rates. They will also benefit from access to other mail classes like First-Class Package Service, which isn’t currently available with Click-N-Ship.

For more information, check out the Endicia blog on FedEx, UPS and USPS shipping costs in 2016 or tune in to an Endicia webinar on the price changes.

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