USPS Announces PRC Approval of January 2023 Price Increases

USPS announced that the Postal Regulatory Commission (PRC) approved the requested price changes for shipping services to take effect on January 22, 2023.

This rate adjustment will affect most parcel services, except for Parcel Select Ground, which may be going away in 2023 as part of a restructuring of ground services the USPS announced earlier this year.

Also, the pricing for USPS Connect Local will remain unchanged. This service provides businesses with an affordable same-day and next-day delivery option for their local customers.

In an effort to make the price hikes not look so bad, the Postal Service said that some Priority Mail flat-rate retail product prices will be reduced compared with the temporary rate adjustment currently in place.

In addition, USPS said that the Priority Mail commercial rates will increase by only 3.6 percent on average, well below the rate of inflation. But since this is on average, shippers will need to look at the real-world impact of their shipments.

“Overall, Priority Mail service prices will increase approximately 5.5 percent, Priority Mail Express service prices will increase by 6.6 percent, and First-Class Package Service prices will increase by 7.8 percent,” USPS said.

Same situation as above with the actual impact on shippers being dependent on the mix of typical box sizes and weights they send.

Also, the approved price changes include the elimination of the Regional Box rates, which may affect some sellers as those boxes and service will go away on January 22.

USPS First Class Parcel Service Classification Review

One interesting side note from this order is that the Commission will open a Mail Classification docket to explore two commenters’ claims that First Class Parcel Service Classification (FCPS) may not be correctly classified as a Competitive product.

The issue appears to be that there is a significant concern this product’s price has increased above the rate of inflation (88% since 2011) since it has been moved to the Competitive products list.

USPS categorizes mail services, or products in their language, as Competitive or Market Dominant. Competitive products are those for which there are similar private sector products and the Postal Service generally has more flexibility to adjust the pricing on those products to match competitors (ie UPS, FedEx, etc.).

Market Dominant products are services like First Class Mail, Media Mail, etc., for which there are no competitive solutions.

What if any impact reclassifying FCPS to Market Dominant now would have is unclear since it would seem most of the pricing damage has been done over the past decade.