[Guest Blog] The 2021 USPS Rate Increases That Impact Your Business

With each new year come new shipping rates. While there are occasional bright spots — like additional cubic pricing support — there generally is not much good news to report on USPS rate increases. While the price of flat-rate packaging tends to increase slightly each year, there are also new charges and restrictions that apply to packages. This year is no different. ShipStation has shared the USPS’s Commercial Base® pricing structure updates that went into effect on January 24th, 2021. 

Why Does the USPS Increase Rates Each Year? 

Contrary to popular belief, the USPS receives no direct tax-payer funding. It is funded purely by postage revenue. With declines in First-Class Mail® letters over the past few decades and steady increases in small parcel deliveries, the USPS has had to reshape how it receives, sorts and delivers its parcels. In fact, it’s very common for the USPS to use FedEx or USPS air services to deliver many of its Priority Mail Express® packages. Mix all of this with increased demands for e-commerce during the COVID-19, and you get a pretty hefty increase in parcel volume. There’s also the very expensive pension plans that keep pulling the USPS further and further into the red each year. 

First-Class Mail

First-Class Mail packages saw the steepest rate increase of the year. Prices across the board are rising by an average of 6%. The rate increase ranges from $0.11 to $0.31. First-Class Mail still remains a substantially more affordable way to ship parcels weighing under a pound, however. 

New $100 Surcharge

Priority Mail and Priority Mail Express parcels are generally under about 10 pounds. When you start getting into that weight range, UPS or FedEx will generally have a more affordable shipping rate. This is now especially true of shipments over 70 pounds. 

The USPS is applying a $100 surcharge to any package exceeding the USPS’s maximum weight and size restrictions. This applies to any parcel exceeding 70 pounds or the USPS’s maximum length of 130 inches or maximum girth of 108 inches. 

Priority Mail Package

Priority Mail rates increased by an average of 3% to 4%. This is in line with many increases in previous years. But additional cubic and express rates are also affected in this year’s updates. 

Priority Mail Package Cubic

Cubic rates work a little differently than regular Priority Mail packages. While weight is the most common threshold for a shipping rate, it is not the final decider. Cubic rates apply to small and heavy packages that weigh less than 20 pounds. Basically, why should someone shipping a can of beans pay the same as someone shipping a mailbox if they’re the same weight but one is much smaller? 

Cubic rates are determined by the following formula:

Length x Width x Height / 1728 = Cubic Feet

If the value falls at or below 0.5, cubic rates will apply to a parcel weighing less than 20 pounds. If the resulting value is higher than “0.5,” the standard rate charge will apply. 

Cubic rates are generally negotiated by high-volume sellers. However, Stamps.com offers cubic rates to ShipStation customers. Below are the cubic rates for 2021.

Priority Mail Express

While Priority Mail Express saw a rate increase this year, it was rather small. Express services only saw a 1% to1.5% average increase in rates in 2021 — lower than increases in the past couple of years!

How to Save on Shipping

If you don’t yet have access to Commercial Base pricing or want to see other pricing structures, the USPS has posted a full list of its 2021 rates. To learn more about the First-Class and Priority Mail rate increases, check out this detailed guide