Postal Service takes ‘measured’ approach in ’23 parcel rate change proposals

The U.S. Postal Service said Thursday it will leave 2023 shipping rates unchanged for two of its products but raise rates significantly on one product where it effectively has no competition.

Under the proposal, which would take effect Jan. 22 pending approval by postal regulators, the Postal Service will not raise rates on its Parcel Select Ground service, where it delivers shipments weighing up to 70 pounds within two to five days. It will also keep rates unchanged on its Connect Local service, where it provides same-day or next-day deliveries depending on the distance. 

Under Connect Local, users are required to drop off parcels at shipping docks or designated locations. In return, they have access to rates generally available only to high-volume shippers.

On the other end of the spectrum, the Postal Service proposed a 7.8% increase on its First Class Package Service (FCPS), which applies to parcels weighing less than 1 pound. Prices on Priority Mail, a two- to three-day delivery service, will rise by 5.5%. Rates on the agency’s Priority Express Mail next-day delivery service will increase by 6.6%.

Gordon Glazer, who runs the postal practice at consultancy Shipware LLC, said that at first glance the Postal Service is taking a “measured approach” to 2023 pricing on its so-called competitive products where it does not have a monopoly. The Postal Service is limiting increases on products like Parcel Select Ground, where it has a fair amount of competition, Glazer said in an email. 

However, it is raising rates aggressively on FCPS because the product’s low margins relative to heavier shipments keep competitors away, he added.

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