New USPS Postage Rates and service changes are on their way starting January 17th, 2016, and they’re BIG. While there’s slight simplifications of some services, overall it will be mostly increases to virtually every USPS service, and even the REMOVAL of some service types. We’ll go over the changes here and give some suggestions on what you can do to adapt to these new changes.
A couple of the bigger highlights to note before we go into further detail:
- First Class package rates have been extended to 15.99 oz for ALL sellers without any CPP approval required from USPS. A huge win for lighter weight eCommerce orders. This means all shippers will have access to First Class Package rates on shipments weighing under 1 lb.
- First Class Package pricing will be the same $2.60 price for 0.01oz-8oz. Good for simplifying package rates on shipments < 8oz, but hurts sellers that ship out very light packages.
- Express Flat Rate Boxes will be DISCONTINUED starting next year (Regular Priority Mail Flat Rate boxes still exist, however)
- Regional Rate Box C will be DISCONTINUED, meaning the maximum weight threshold is now 20 lbs on Box B (Box A retains a maximum weight of 15 lbs.)
- All Flat Rate options will have a rate increase
USPS Rate Changes for 2016
If you want a simple break down of the rate changes from USPS coming in 2016, the general idea of what’s changed: Just about everything is getting more expensive. Given that USPS hasn’t increased rates on Priority Mail since 2013, this change has been expected for a while.
While there’s a few instances of some services getting slightly cheaper, you’re likely not going to be seeing any savings overall in shipping going forward into 2016.
Let’s break down some shipping rates.
First Class Package Rates 2016
Mostly increases, with a slight drop in 8oz. and 13oz rate, and 13oz-15.99oz has been opened up to Commercial Base. Overall it makes First Class Packaging more versatile, but limits options for very light packages.
This is big news for new sellers starting out in the world of eCommerce. Previously, you had to hit big shipment volume numbers for access to the 13oz-15.99oz tiers of First Class Package shipments, but now anyone with a computer can easily access them. Since a lot of what is shipped online from sellers is lightweight, more orders than ever can be shifted to First Class Package that will provide significant savings to a large number of people.
Regional Rate Shipping Rates 2016
Regional Rate, while less used and understood by many sellers (for good reason, boxes are only available online and generally not advertised by USPS), are a bit simplified by eliminating Box C. Since Box C was eliminated, the heaviest a Regional Rate shipment can be has gone from 20 lbs. to 15 lbs. (for Box B).
Regional Rate boxes are completely FREE available from the USPS.com online store, order them ahead of time as they are free and take a little bit of time to be delivered.
They come in four sizes, Regional Box A1, A2, B1, and B2. Since Regional Rates have only increased slightly, they end up beating Priority Mail in many shipping scenarios now. Have a good supply of each box size on hand in case you can get some quick and easy savings.
Priority Mail Shipping Rates 2016
Domestic rates will increase by 13.3% on average which is significant at face value. Despite this increase, USPS will remain the most cost efficient alternative for the majority of shipments sub- 5lbs. It is their sweet spot and given there is no surcharge for residential delivery nor fuel, merchants are unlikely to find a better rate with an alternative carrier in the 1-5lb range. It is a price increase that will likely be absorbed and thus sellers will want to really analyze their margins to determine required changes to consumer facing shipping rates and thresholds
These are some of the current CPP rates for 2015 alongside the new rates in 2016, and the price increase across zones 1 – 5. As you can see, across these lower weight tiers, pricing has increased as much as $2.14 per shipment! Despite this, Priority Mail will still be one of the best deals for shipping due to similar increases coming from UPS and FedEx. It is also important to note that USPS has held their Priority Mail rates constant for over 2 years, unlike UPS and FedEx which have seen rate increases on a much more consistent basis.
Going forward in 2016 with your shipping process, when the weight starts getting to the 5lb+ range, or your order has to ship further than Zone 4, considering alternative shipment methods such as Flat Rate, Regional Rate, and Cubic Shipping.
A Flat Rate Padded Envelope can support very high weight packages that can ship to Zone 6 for $5.90, while a 5 lb. Priority Mail package to Zone 6 will cost you $14.76! Flat Rate for orders that have to ship to the higher Zones should be used often.
Similarly, Cubic Shipping can utilize package weight up to 20lbs. A 10lb package through Priority Mail going to Zone 4 would be $9.74, and cubic shipping can potentially save you around $2-$3 depending on the volume dimensions of your package.
For a Regional Rate example. Their largest box. Box B, can ship to Zone 3 for $8.75 and support up to 20 lbs. A 15lb. Priority Mail shipment going to Zone 3 would cost $10.26, which costs more even though it weighs a full 5 lbs. lighter.
There are many scenarios where alternate shipping methods beat out Priority Mail, and they should certainly be considered going into 2016.
Priority Mail Express (Overnight Shipping)
Priority Mail Express, USPS 1-day shipping option, will be seeing big changes as well. Flat Rate boxes for Express shipments are going to be DISCONTINUED, only allowing for Express Envelopes if you want Flat Rate 1 day shipping.
Also, rates will be increasing a lot more than any other service. For example, a 3 lb. package going to Zone 3 will ship for $24.08, compared to the old price $17.16, an increase of $6.92. If you ship a lot of items Express, looking into same day shipping on orders to reduce overall delivery time might be an option worth considering.
Tips / Takeaways / What you should do
Now that we have a grasp on the new rates, let’s go over some actionable strategies going forward to make sure we’re not overspending on shipping in the upcoming year, and can be better prepared for likely future increases in shipping rates.
Adapt and diversify the shipping services you currently use.
Some sellers find a shipping service they like, and use that for every single order. Sacrificing shipping and overall cost margins for simplicity may become less viable in 2016, and likely unsustainable in the following years to come. Ship smarter by diversifying how you send your orders out. Here’s some services that can offer savings depending on certain variables like package weight, dimensions, and delivery time.
Flat Rate, for 2016 at least, will be your new best friend. Flat rate allows almost every weight of package and ships to every Zone for the same price. This means that with the new rate increases Flat Rate will beat out services like Priority Mail and Regional Rate in more scenarios than ever before. Getting your orders to fit within Flat Rate Envelopes and Boxes will lead to big potential savings throughout the course of the year, Padded Flat Rate envelopes especially.
Order Flat Rate boxes and envelopes from USPS.com completely free. They have a wide variety of sizes that should be taken advantage of, and you should probably start considering making Padded Flat Rate Envelope a staple part of your shipping process.
As a general rule, when your orders are shipping to Zones 5-9, Flat Rate should strongly be considered as it does not factor Zone or weight into its pricing, only if it fits in the box (or envelope). With the new Priority Mail rate increases:
A Padded Flat Rate Envelope will beat Priority Mail shipment of ANY WEIGHT on price when shipping to Zone 5-9.
A Medium Flat Rate Box will beat any Priority Mail shipment that weighs 6 lbs. or higher going to Zones 5-9.
A Large Flat Rate Box will beat any Priority Mail shipment that weighs 12 or more lbs. shipping to Zones 5-9.
I talk about Regional Rate a lot, and I’ll use this opportunity to do so again. Regional Rate is conceptually the half-way point between Priority Mail and Flat Rate. It now has TWO weight tiers (compared to the old 3-level weight tier depending on which box you got, the removal of box C takes away the 25 lb. option), pre-sized boxes (only B and A, the largest size C is discontinued), and can be cheaper than both Flat Rate and Priority Mail in certain scenarios. Always have Regional Rate Boxes on hand (which you can order from USPS.com on the free supplies page) to save money on the occasional order that Regional Rate can give you savings on.
Not familiar with Cubic? Instead of weight (as long as it’s under 20lbs), Cubic only considers the dimensions of your order, measured in Cubic Ft. ShippingEasy’s Flat Rate Green Cubic shipping option allows you to get discounts on these smaller, heavier packages that you might not get with Priority Mail, Regional Rate, and even Flat Rate.
Use ShippingEasy’s Flat Rate Green Cubic Shipping Calculator to try various sample shipments to see what savings you can make compared to the new Priority Mail rates.
Start optimizing shipping NOW
There are many ways you can optimize your shipping to lower costs. Doing things like, but not limited to:
- Reducing order weight to get packages below 16oz so they can qualify for first class package shipping
- If your box can fit within a Padded Flat Rate Envelope, and would be cheaper by virtue of weight, see if you can tightly pack your order within that Padded Flat Rate Envelope, box and all!
- Ship orders out the same day you receive them. While not possible beyond a certain time in the day threshold, fulfilling orders same day will get your orders to customers faster, and you can utilize cheaper shipping options like First Class without the fear of having customers waiting too long to receive their order.
- As always, utilize free shipping supplies from USPS, UPS, and FedEx. Always have boxes on-hand so you don’t need to do the midday “box purchase rush” trip which can be expensive– as buying things retail tend to be.
- If you’re shipping with UPS and FedEx, consider the entire cost of shipping, including extra charges like fuel surcharges and residential delivery. Shipping pricing differences may seem small on a granular level, but over hundreds and thousands of orders, the differences really show.
Make SURE you’re getting CPP rates on postage.
While these rate changes close the gap a bit between Commercial Base and Commercial Plus rates, the gap still exists. With shipping services like ShippingEasy that have Commercial Plus rates baked in with no work required on the seller’s part, there’s no reason you should ever be purchasing postage at CBP rates.
First Class Package is still the king of lightweight orders
With the standardization of shipping rates on First Class Packages up to 8 oz., merchants that ship out very light packages will likely be hurt by the change. One advantage you can pull from this is to take advantage of the wider weight range and include some extras in your shipment, whether it be a thank you card, item order protection such as more packing peanuts, or heftier packaging that protects the contents within—anything you can think of as long as you don’t pass that 8 oz. threshold.
Overall, these changes will affect many sellers, especially those utilizing First Class Package service, and push sellers to ship their orders out more efficiently. If anything, these changes are a step toward much bigger rate changes that will be affecting the eCommerce world in a much more impactful way. Shipping costs and margins may soon be the difference between even making a profit on orders, so having a sensible shipping policy and a rock solid shipping process will be very important moving into the next year, and especially 2017 and 2018.
To learn more about 2016 Shipping Rate changes, download the ShippingEasy 2016 Rate Change Guide
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