Shipping Costs

Learn more about how to navigate the USPS Parcel Select price changes

The United States Postal Service (USPS) is a major player in the parcel shipping industry, offering a variety of services for both SMB and enterprise businesses. As they navigate this ever-changing landscape, their recent announcement regarding a significant price increase for their Parcel Select service throws a curveball into the mix.

The United States Postal Service (USPS) recently announced a significant shakeup for its Parcel Select service. Effective July 14, 2024, Parcel Select rates will increase by an average of 25%, according to a notice filed with the Postal Regulatory Commission. The USPS anticipates this change will result in a 1.5% revenue increase but also a 2% decline in Parcel Select volume next year.

This move comes as a surprise to many businesses who have relied on Parcel Select's affordability for high-volume shipments. The price hike adds a layer of complexity to shipping strategies and raises critical questions about overall shipping costs. Businesses now face the need for strategic planning to navigate this new landscape.

What is Parcel Select and Who Uses It?

Parcel Select is a ground shipping service known for its affordability and regional delivery capabilities. It caters primarily to high-volume shippers and consolidators who leverage the USPS's extensive network for cost-effective parcel delivery.

Here's a deeper look at how Parcel Select traditionally functioned:

• Cost-Effective Solution: Parcel Select historically offered significant discounts for businesses that utilized consolidators. These consolidators grouped packages from various shippers, sorted them, and then entered them into the USPS network, often at local post offices, for final-mile delivery. This approach minimized transportation costs for the USPS and resulted in competitive rates for high-volume shippers.
• Focus on Earlier Network Entry: Traditionally, high-volume shippers and consolidators leveraged the USPS's extensive network by dropping off parcels at local post offices for final-mile delivery. This minimized transportation costs for the USPS and allowed consolidators to negotiate lower rates. However, the USPS is pushing for a significant change. They now aim to have consolidators enter packages earlier in the network, potentially at sorting centers instead of local post offices.

The Changing Landscape and Potential Impact

The upcoming USPS Parcel Select price hike signifies a significant shift in the USPS's strategy. While the service was previously known for its affordability, particularly for high-volume shippers, the new pricing structure disrupts this established model and could have a ripple effect across the parcel shipping industry.

Here's a breakdown of the potential consequences:

• Increased Costs for Businesses: The average price increase of 25% for Parcel Select will undoubtedly translate to higher shipping costs for businesses that utilize consolidators, especially with peak season approaching in just four months. While alternative carriers like UPS and FedEx might offer options, peak season surcharges are likely to inflate their rates as well. Businesses that have relied heavily on a single carrier with negotiated rates in the past ten months may be particularly squeezed.
• Potential Delays and Disruptions: The USPS is also pushing for consolidators to enter packages earlier in their network, at sorting centers instead of local post offices. While this aims to streamline processing for the USPS, it could introduce unforeseen delays. Businesses accustomed to predictable delivery times might face disruptions if these changes impact package movement within the USPS network.
• Shifting Strategies for Consolidators and Businesses: Smaller consolidators who previously enjoyed significant cost advantages through Parcel Select might be squeezed by the price hike. This could force them to explore alternative carriers, potentially impacting established shipping strategies for businesses that rely on their services.

In essence, the USPS Parcel Select price hike creates a crossroads for many businesses. They may need to adapt their shipping strategies to navigate the new landscape and ensure they remain competitive.

Navigating the Price Hike

While the price hike may pose challenges, there are still options available. ProShip's multi-carrier shipping software empowers businesses to navigate this changing landscape and optimize their shipping strategies. Here's how ProShip can help:

• Carrier Diversification & Rationalization: This price hike underscores the importance of carrier diversification & rationalization (on top of rate shopping) for all businesses, not just during peak season, but as a core strategy throughout the year. ProShip connects you with a wide range of carriers, including USPS with the new rates. This allows you to compare rates and services across different carriers to find the most cost-effective option for each shipment. But with the new parcel landscape, simply having access to multiple carriers isn't enough. Carrier rationalization involves strategically selecting a core group of carriers that best meet your specific shipping needs and volumes. This allows you to negotiate better rates and service agreements with these key partners, while still maintaining access to alternative options.
• Unmatched Surcharge Visibility: Unlike many competitors, ProShip provides unparalleled transparency when it comes to surcharges. You'll see a line-item breakdown of all accessorial fees, including fuel surcharges and residential area surcharges, for each shipment. This granular detail ensures you understand exactly how these variable costs impact your bottom line. ProShip doesn't ask you to "trust us" – you see the calculations upfront, empowering you to make informed decisions.

While the impact of the price hike will vary, some industries, like e-commerce and retailers with BOPIS options, might be particularly affected. ProShip can help these businesses not only find alternative carriers but also explore cost-saving strategies like Carrier Volume Balancing or leveraging Advanced Date Shopping.

By leveraging ProShip's carrier diversification and exceptional surcharge visibility, you can not only identify alternative carriers that might offer more competitive rates for your specific needs, but also more accurately predict your overall shipping costs, taking into account potential surcharge fluctuations. This allows you to make data-driven decisions about your shipping strategy, ensuring you're getting the most value for your money.

In the face of the USPS Parcel Select price hike, ProShip equips you with the tools and information you need to adapt and thrive.

The Bottom Line

With the USPS Parcel Select price hike set for July 2024, businesses have a limited window to prepare their shipping strategies. ProShip can help you navigate these changes quickly and efficiently. Don't wait until the last minute to optimize your shipping costs.

The upcoming USPS Parcel Select price hike will have a varying impact on businesses depending on their shipping strategies. ProShip's multi-carrier shipping software offers a powerful solution to navigate these changes and ensure you're getting the most cost-effective and reliable shipping options available.

Ready to Take Control of Your Shipping Costs? Learn more about ProShip's multi-carrier shipping software and see how it can help you optimize your shipping strategy and save money. Contact us today to schedule a discovery call and learn more!