Like many other business expenses, mailing rates are going up – again. The USPS has announced new rates for 2020, scheduled to take effect on January 26th. Shipping costs will rise at an overall rate of 1.9%, which the Governors of the Postal Service expect to shrink the red ink that has plagued the service for years.
These increases will be reviewed by the Postal Regulatory Commission (PRC) before the new rates are implemented.
What Are the Mailing Rate Increases?
Rate increases will vary depending on the service selected and type of mailing, as examples:
- Letters and ‘flats’ rates (1 oz.) will remain unchanged at $.55 and $1.00 respectively
- Additional per-ounce rate will remain at $.15
- Metered letters retain their existing $.50 rate
- Domestic postcards remain stable at $.35
Priority mail will include price increases as in these examples of domestic rates:
Service Existing New Rate
- Flat-rate box – small $7.90 $8.30
- Flat-rate box – medium $14.35 $15.05
- Flat-rate box – large $19.95 $21.10
- Flat-rate envelope – regular $7.35 $7.75
- Flat-rate envelope – legal $7.65 $8.05
- APO/FPO flat-rate box – large $18.45 $19.60
- Padded flat-rate envelope $8.00 $8.40
Priority Mail rates will rise by 4.1%, while Priority Mail Express products will cost shippers an additional 3.5%. Mailing rates are driven by the Consumer Price Index, but shipping prices are typically tuned to market conditions to remain competitive.
A complete list of the new proposed rates is available on the Postal Service Postal Explorer site.
Why Mailing Rates Are Increasing
USPS has been struggling to reduce operating losses for several years. In the second quarter of FY 2019, losses amounted to $2.1 billion compared to a loss of $1.3 billion over the same period in the prior fiscal year. For total FY 2019, this amounted to a loss of $8.8 billion.
Governors of the USPS believe the rate changes will generate the revenue badly needed by the service. USPS management has taken several steps to improve the financial stability of the service, including:
- Cutting work hours through reductions in overtime and attrition
- Seeking regulatory reforms through Congress to provide more freedom in establishing pricing
- Proposing changes in statutory requirements related to pension funds and health benefits for retirees
- Investments in technology that improve efficiency and provide better service and new products
Despite the many actions being taken by the USPS in recent years, increased revenues through rate increases are the most effective and readily available method of generating income.
What Do the USPS Rate Increases Mean for Businesses?
With another rate increase from the USPS, utilizing the most efficient and cost-effective processes for shipping is even more important for businesses, both large and small. Many companies spend a large portion of their annual budget on shipping and mailing costs, especially with today’s focus on eCommerce and online shopping:
- Online retailers
- Mail marketing businesses
- Media and other subscription distributors
Weight and zone for shipments have a considerable impact on the rate increases, with those weighing 3 lbs. or more having a more significant impact on cost.
New rate structures are likely to boost the demand for Priority Mail and Priority Express services. Priority Mail flat rates may prove to save mailing costs over other methods, while still offering the advantages of Priority Mail.
Taking advantage of automation and volume discounts contributes to controlling shipping costs and improving productivity. Technically advanced postage meters are just one-way companies can reduce mailing expenses with:
- Ease of use – simple operation with intuitive controls
- High speed – process volume mailing with high-capacity feeders that handle multiple sizes and thicknesses
- Features – automatic weighing, labeling, and sealing makes streamlines the mailing process
Shipping facilitated with sophisticated postage meters give businesses other advantages as well:
- Accounting – capture and record mailing costs for multiple accounts to allocate expenses to multiple departments seamlessly
- Rate Shopping – find the best rate easily with integrated rate shopping to save money and provide better service
- Commercial Base pricing – preparing Priority Mail and Priority Mail Express can take advantage of Commercial Base pricing discounts
Ways to Save Money on USPS Shipments
Businesses can offset some of the impact of the USPS rate increases through changes in shipment practices:
- Utilizing the most economical envelopes with complete USPS-approved labeling
- Packaging counts – use the lightest and smallest packaging that will accommodate the contents
- For lightweight (< 1 lb.) items, consider using First-Class Package Services (FCPS) to lower costs when possible
To manage your mailing and shipping operations more efficiently, talk to the professionals at Donnellon McCarthy Enterprises (DME). We have the experience, equipment, and technology that will benefit your business, enabling you to:
- Save money on shipping costs
- Improve efficiency with automated mailing equipment
- Increase capacity for volume mailings
Take the first step toward control of shipping expenses and increased productivity. Contact the DME experts today.