What the 2014 USPS Pricing Changes for Shipping Services Means to Retailers

5. Consider working with a third-party organization to help you both modally optimize and negotiate best-in-class carrier contracts, while rightsizing the earned discount (portfolio) incentive tiers to reflect the modally moved volume to lower-cost carriers.

Here's a general summary as well as product-specific USPS pricing changes (effective Jan. 27):

• three percent increase to Priority Mail Express;
• no increase on the weighted average of weights, zones and options for Priority Mail;
• three percent increase for parcel return service;
• five percent increase for first class package service;
• Parcel Select (only non-contract volume impacted) packages will increase 9.2 percent;
• new zone 9 for "freely associated states" (Micronesia, Marshall Islands and Palau); and
• twenty-cent surcharge for not having an Intelligent Mail Parcel Barcode.

Priority Mail Express (formerly Express Mail)

• average changes: retail (plus 3 percent), base (plus 2.9 percent) and CPP/"Plus" (plus .6 percent);
• CPP Weight and Zone decreased .1 percent;
• CPP flat-rate pricing increased 15 percent; and
• 10:30 a.m. delivery option (add $5.00).
  #INLINE-CHART#

Priority Mail

• Reduced the combination threshold to participate in the CPP pricing to 50,000 units per year. (It was 150,000 for cubic and 75,000 for weight/zone).
• Many of the rates were reduced for cubic and weight/zone products, and only slightly increased for flat rate options.
• This should make this popular segment even more competitive considering the 4.9 percent ground increases from the private carriers (UPS, FedEx). In the one to 10 weights, their increases are over 7 percent!
  #INLINE-CHART#

Parcel Select

• Most commonly used by private consolidators like FedEx SmartPost, UPS SurePost, Newgistics or OSM.
• These changes primarily impact residual volume as the major private consolidators are under contracts unaffected by this change. It doesn't mean they didn't raise their prices, however.

For 2014, FedEx SmartPost and UPS SurePost increased rates 7.3 percent for one-pound to nine-pound packages. It's notable that there's a significantly higher increase for deeper entry — DDU (8 percent), DSCF (5.6 percent), DNDC (5.1 percent), Non-Destination Entry (5.9 percent). It may make sense to comparison shop between carriers as this segment is very competitive and real net pricing is based upon negotiation skills.