Ho-ho-hold on. It's that time of year. Shipping costs are rising again.
The United States Postal Service (USPS) is slated to adjust its pricing structure for multiple shipping services on January 19, 2025.
What does this price structure adjustment mean, and how will shipping options be impacted? We have the answers. Read on for a detailed analysis of the planned pricing adjustments and how they might impact businesses next year.
2025 USPS price adjustment
The USPS plans to implement a price increase across several shipping services, including USPS Ground Advantage, Priority Mail, Priority Mail Express, and Parcel Select.
Here’s a breakdown of the expected increases for 2025 …
USPS Ground Advantage rate increase
The USPS Ground Advantage service, which has become increasingly popular among small businesses, will experience a 3.9% rate increase. This adjustment positions the service strategically between economy and premium shipping options. The new structure includes:
- Base rate modifications for various weight categories
- Zone-specific pricing adjustments
- Special handling fee of $7.50 for live animals and perishables
About Ground Advantage
The USPS launched Ground Advantage in July 2023 as their flagship ground package service. It replaced shipping services like First-Class Package Service, Retail Ground, and Parcel Select Ground.
Parcel Mail and Express changes
Priority Mail and Priority Mail Express services will see a moderate increase of 3.2% in 2025. This adjustment reflects the USPS's strategy to maintain competitive pricing while addressing operational costs. The change particularly affects commercial shipping rates, though it remains one of the smaller increases compared to other service categories. A notable addition is the new $15.00 fee for shipping live animals and perishable goods through Priority Mail, while Priority Mail Express will charge $7.50 for the same special handling.
Parcel Select rate adjustments
Parcel Select services will undergo the most significant changes, with a 9.2% increase that reflects the USPS's strategic overhaul of its shipping network. This substantial adjustment follows the controversial changes implemented in 2024, which included a 25% average price increase for certain Parcel Select categories.
The reasons behind these increases, particularly the 25% hike for certain Parcel Select categories, are quite intriguing ...
These price adjustments that the USPS are making are aligning with USPS's broader strategy to encourage shipping partners to inject volume further upstream in their network.
The higher increase for USPS Parcel Select services represents a continued push toward optimizing the postal service's delivery network while maintaining competitive positioning in the market.
How the USPS price hike compares to other shipping service providers
The USPS's planned rate increase for 2025 positions the agency strategically against its primary competitors. With increases averaging 3.2% for Priority Mail and Express services, USPS maintains a competitive edge compared to UPS and FedEx, who both announced an average increase of 5.9%. (Both will be taking place at the tail-end of the holiday shipping rush.)
The reason for the 2025 USPS price hike
The USPS has been grappling with financial issues for some time now and this year has been no different. It reported a loss of $9.5 billion in the fiscal year 2024, (up from the $6.5 billion loss from last year). Therefore, USPS leaders believe the new rates will keep the service competitive and will provide the agency with revenue.
The long-term strategy
USPS’s financial challenges and the decrease in demand aren’t stopping it from seeing its package business as a crucial part of its long-term strategy. Quite the contrary. It aims is to increase the USPS’s share in the parcel delivery market:
“We aim to reduce costs by improving our operational precision and deploying modern-day logistics strategies. Our goal is to compete for a growing share of the package market,” stated Postmaster General and CEO Louis DeJoy.
USPS is still one of the most affordable shipping options
Despite the price hikes, the USPS remains among the most affordable postal services globally. It is also worth noting that even with the proposed rate increases, USPS prices will still be one of the most affordable shipping options out there.
Save money & eliminate price hike headaches - with a shipping software
In 2024, the USPS implemented two price hikes, just like they did in 2023. Therefore, by using our detective skills, it can be inferred that 2025 will follow a similar pattern: one price increase in January and another in July.
If you want to keep USPS prices from taking more from your profits, it is worth exploring shipping software. Shipping software can help lower your USPS shipping rates by ensuring you get discounted shipping rates. It can also streamline your operations and help optimize your fulfillment processes.
Shipping software like Zenventory can also save you money by giving you access to the lowest commercial rates with USPS out there.
Final thoughts
The USPS’s decision to raise prices is a strategic response to financial challenges and market conditions. While the increase may seem significant, the USPS continues to offer value for money with its affordable and upfront pricing. As consumers and businesses adapt to these changes, the USPS remains committed to delivering reliable and cost-effective postal services.
However, if you are tired of continuous price adjustments, shipping software like Zenventory can help you save money by getting you access to the cheapest USPS rates out there. Book a demo with one of our product experts to learn more about how shipping software can help you and your business.
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