USPS changes parcel pricing strategy; shipper impact uncle
On June 23, the U.S. Postal Service (USPS) implements a pricing change that subjects more parcels to rates pegged to their dimensions instead of their actual weight. What impact, if any, this has on the USPS shipper universe won’t be known for months.
Under the new policy, USPS will, for the first time, price parcels which measure more than 1 cubic feet – or 1,728 cubic inches in multiplied length, width and girth – and which move less than 600 miles by the higher of either its “dimensional” or actual weight. Currently, all parcels moving less than 600 miles are exempt from dimensional pricing. Also on June 23, each parcel measuring more than 1 cubic foot and moving more than 601 miles will be priced using a new “divisor” that calculates dimensional pricing, better known in the industry as “DIM.” The divisor will be reduced to 166 from 194.
USPS will not apply dimensional on any parcels measuring less than 1 cubic foot.
USPS would not disclose the mix of parcels that fall under the cubic threshold and would not disclose the typical parcel’s length-of-haul, and would. Gordon Glazer, a USPS specialist at consultancy Shipware, LLC, estimated that 80 percent of USPS traffic cubes out at less than 1 cubic foot. That’s because USPS is most price-competitive for small and lightweight shipments that would likely measure less than 1 cubic foot, Glazer said.
USPS in 2017 had a 61 percent delivery share of U.S. parcels weighing five pounds or less, according to data from consultancy ShipMatrix. Under 5-pound parcels comprise 69 percent of the U.S. parcel market, ShipMatrix found.