Last updated, May 13, 2024
After several weeks of strong rumors involving changes to the USPS Parcel Select program, the United States Postal Service has formally posted notice of these changes.
This is the service that is heavily used by consolidators that collect these shipments from shippers and inject them in varying degrees at the USPS for final delivery to customers. It is considered the workhorse of ecommerce, so it is important to understand what has been proposed to change (and what is not).
What are the Proposed USPS Changes?
Ounce-based pricing for parcels under 1 lb – Currently, there is a Parcel Select Lightweight class which has tiered pricing, at the 4-ounce increment (most consolidators, however, tiered it to 1-ounce increments). The proposal is to eliminate this class and have one price for everything, up to one pound. This is a momentous change to the model and the pricing as the average increase is 69.15%.
Pound-based pricing – prices are increasing in the one pound and up category as well, with increases averaging 31.18% for parcels in the 1lb to 5lb range.
What is Not Changing at this Time
It was widely rumored that the USPS would also be eliminating the Destination Delivery Unit (DDU) entry level discount for these services. This is the deepest discount, as these parcels require the least handling by the USPS to complete the delivery. All consolidators use this injection point, to varying degrees, in their model. Postmaster General Louis DeJoy threw shade on this program when testifying before Congress last month. Per DeJoy, “we had a competitive network, running around our network, getting into delivery units”. Nevertheless, the proposed pricing still reflects this DDU level discount.
When are These Changes Effective?
The USPS has proposed that these changes take effect on July 14, 2024.
Things to consider:
It is important to note that the percentages of the increases posted above are based on USPS published rates. Consolidator rates are based upon modifications to the published rates and determined by their individual Negotiated Service Agreements (NSA’s)
The proposal has been approved by the Postal Service Governors, however the Postal Regulatory Commission still needs to review and approve it. It is expected that it will be approved.
Although the DDU entry level discount is not changing at this time, it may follow later. The USPS is already in the congressional hot seat regarding very slow mail in districts experiencing a shift in their upstream postal sortation model. Forcing more parcels upstream with the approaching peak season, and what is sure to be a massive volume of mail-in ballots related to the 2024 presidential election, may have impacted this decision.
What Actions Do I Need to Take?
None. Keep in mind that the published rates are for services with a Negotiated Service Agreement in place with the USPS. The actual impact of these changes will take that into account. Please keep an eye here for further updates as this will be the source for more information.