February 1, 2011, 12:00 AM

Come April, the cost of shipping via U.S.P.S. will rise for ground Parcel Post

For standard ground Parcel Post, the service most often used by online retailers, the cost of shipping to zone one or two will rise to $5.10 for a 1-pound package and to $7.23 for a 5-pound package.

Come April, the cost of shipping via U.S.P.S. will rise for ground Parcel Post

Like death and taxes, the rising cost of shipping seems inevitable.

The U.S. Postal Service expects to get approval for a new postal rate schedule recently filed with the Postal Regulatory Commission that will raise rates by an overall average of 1.74% effective April 17, the Postal Service says. The average increase is limited to the Consumer Price Index as required by the federal Postal Law of 2006, and the PRC basically needs to just confirm the accuracy of Postal Service's numbers, not approve the hike itself.

For standard ground Parcel Post, the service most often used by online retailers, the cost of shipping to zone one or two would rise to $5.10 for 1-pound package and to $7.23 for a 5-pound package. Zones are based on the distance from the shipper to the final destination.

Noam Paransky, a senior manager and shipping industry expert at consultants Kurt Salmon, notes that zone 2 rate increases generally have the largest impact on shippers because they increase costs for shipments that combine the shipping services of the Postal Service and either FedEx Corp. or UPS. Many companies use FedEx or UPS to ship to the Postal Service for local zone 2 deliveries.

Paransky adds, however, that the new rates will not impact most large shippers until their current contracts get renegotiated.

The Postal Service rate hikes do not affect parcels shipped via expedited Express Mail or Priority services.

The rate changes include a 3.8% increase for first-class parcels and 11.3% for standard mail parcels. It has been nearly two years since the last rate changes, the Postal Service says.

The rate changes are separate from a rate hike proposal that the Postal Service submitted last year to the PRC, which rejected a request to raise most rates between 4% and 6%Ñabove the permissible increase under the Postal Law of 2006. The Postal Service has appealed the commission's rejection to the U.S. Court of Appeals for the District of Columbia.

Average rate hikes of 5.9% went into effect last month for UPS and FedEx, though fuel surcharge reductions drop the average increase to 4.9% at UPS and 3.9% at FedEx. Jack Mitchell, president and CEO of Parcel Appraisal & Negotiations Group, a firm that negotiates shipping contracts on behalf of retailers and other shippers, notes that UPS' average net increase is higher in an attempt to get its air shipping rates closer to those of FedEx.

Mitchell adds that ground shipping rates for both UPS and FedEx rise between 7.8% and 8.8% for the heaviest concentration of shipments—those from two to five pounds for zones two through five.

paul@verticalwebmedia.com

comments powered by Disqus

Advertisement

Advertisement

Advertisement

From IR Blogs

FPO

Bryan Gudmundson / E-Commerce

Which incentives are best at saving the sale?

It’s not necessarily the most valuable incentive that converts the best, a case study shows. ...

FPO

Heather Smith / E-Commerce

Taking advantage of the sharper marketing tools from Pinterest

Pinterest’s revamped private messaging system gives retailers more options for directly connecting with influential and ...

Advertisement