Farewell Zone Free Shipping Rates
Recently, the United State Postal Service (USPS) announced the proposed rate changes for 2019. While the changes are just proposed at this time with the Postal Regulatory Commission, there most certainly will be some changes and increases that will happen. The proposed changes coming are an average of 2.5% increase on average across all product offerings. One of the biggest changes is how the pricing structure will be handled with First Class Mail.
Even though the USPS parcel volume has grown 7.5% this year, they continue to lose revenue. A large part of the increase in parcel volume is because many retailers and carriers use the USPS for last mile delivery. The USPS shipping price often falls below the market average and what is competitively viable for other companies to offer. The USPS continues to lose revenue as more companies take advantage of these rates because their pricing is controlled by the law.
Currently, First Class Mail is ounce based pricing for under 1lb packages that has a delivery time of 2-4 days on average. One of the best features about this product is that it the pricing is not based on zones like many other products. Pricing is a flat rate based on weight no matter where you are shipping domestically in the US.
The proposed pricing has moved from a single zone to 9 zones based on distance from the shipping origin. This pricing structure will certainly have an impact on shippers who are using this service for under 1lb shipments. Currently, location of where you are shipping these packages does not have an effect on the pricing, but going forward the ship from location will become very important.
Although the increase in rates would certainly lead to revenue gains for the USPS in the short term, long term it could mean a very different shipping environment. The largest competition to the USPS is not other large parcel companies but retailers shipping themselves. Retailer shipping volume accounts for a large part of the USPS parcel business and there are already signs that this is going to change. Amazon has been investing heavily into developing its own delivery program. The proposed rate changes will drive more retailers to pursue their own delivery programs instead of continuing to rely on the USPS.
If you are a first class mail shipper it is a good idea to begin to conduct a study on the locations of your customers and how this pricing might affect your business. For information on how IDS can help optimize your shipping location, Contact Us Today!