USPS announces 4.6-percent increase to 2012 shipping rates

The U.S. Postal Service (USPS) said today that, effective Jan. 22, it will raise rates on its portfolio of shipping services by 4.6 percent.

Under the 2012 rate adjustments, rates on USPS's Express Mail overnight delivery service will increase by an average of 3.2 percent, while rates for its two- to three-day delivery service, known as Priority Mail, will increase by 3.1 percent. USPS's First Class Package service, formerly known as First Class Mail Commercial Parcels and recently reclassified as a product subject to market competition, will increase by 3.7 percent.

The biggest increase, 9 percent, will be imposed on international mail services. But perhaps the most significant is an 8.5-percent increase on the USPS's Parcel Select product, where packages are tendered by private carriers and so-called parcel consolidators to the Postal Service for delivery to residential destinations.

Parcel Select is extremely popular among merchants who handle most of their transactions online and rely on a network of carriers, consolidators, and the USPS to deliver orders to residential customers. Many experts see products like Parcel Select as the future of the USPS as many of its other product lines—in particular, first-class mail—are increasingly vulnerable to digitization. "You can't digitize a sweater from L.L.Bean," said Jerry Hempstead, head of an Orlando, Fla.-based consultancy that bears his name and a long-time postal watcher.

USPS said it would introduce flat-rate pricing on its Express Mail product, also on Jan. 22. Shippers will pay a flat rate of $39.95 for all shipments weighing up to 70 pounds that can fit into a special flat-rate envelope. The service will be available for all domestic U.S. mailings, USPS said.

The Postal Service already offers flat-rate pricing on its Priority Mail service.

In addition, USPS will introduce a service for Priority Mail commercial mailers known as "parcel intercept." Under the service, a customer can request that mail be intercepted before delivery is attempted to the final destination. The shipment can be returned to sender, held at a local post office, or redirected to another destination, USPS said. Users of the service will be charged $10.95 in addition to Priority Mail postage.