Shipping Rates Changes for 2020

By Mike OJ

Wednesday, December 18, 2019

3mins

Recently, The United States Postal Service released its proposed changes to shipping rates for 2020, to take effect on January 26, 2020. FedEx also released their changes to an extent (other details, like changes to FedEx One Rate, still to come).

Every year, shipping carriers review their pricing and adjust their shipping rates in order to meet up with fuel costs and industry demands that is why it is important to keep an eye on the costs of running your business, especially when they are changing.  

In this blog post, We will dive into the 2020 shipping rates for some of the most popular USPS services and show what exactly the increases will look like to your bottom line.

2020 Priority Mail shipping rates

Starting with what is probably the most popular and most used shipping service USPS offers. Priority Mail offers many features, including various flat rate options. The standard Priority Mail shipping cost is calculated by weight and destination, called Zone.

Priority Mail shipping rates are increasing by an average of 3.0 percent, a much lower increase than the 2019 rate increase of 6.2 percent. While that’s good news, e-commerce merchants will still feel the increase a bit.

Let’s take a look at an example,

If you ship 500 packages per month, that’s a minimum difference of $115 per month, cutting into your annual revenue by at least $1,380. A way to mitigate some of this effect is to consider Priority Mail Flat Rate and Regional Rate whenever possible.

In the same example, let’s say you’re sending a 4-pound package to Zone 5.

Priority Mail: $10.33 once the 2020 shipping rates go into effect

Regional Rate Box A: $8.92

That would be a substantial saving over the current 2019 price of $10.03, let alone the increased 2020 rate. Since it’s still Priority Mail, you’re not losing any of the benefits and you can order the boxes free from USPS to be delivered to your home or office! Check out the Regional Rate Box A and Box B 2020 shipping rates below.

Something else you could try is splitting orders into smaller packages and shipping them via First-Class Package Service. It will not always apply but is certainly worth looking into.

First-Class Package Service

Last year’s changes caught merchants by surprise, as this service used to be based solely on the weight and did not change based on destination. It was easy to use and very cost-effective. Then the USPS changed the structure to take Zones into account like Priority Mail and the average rate increase hit double digits for First Class Package Service. In 2020, there aren’t any major structural changes but those rates are still increasing.

Sure, it’s just a few cents but that all adds up. Many sellers who use FCPS are operating on some thin margins when it comes to shipping, so those few cents can still be problematic.

What this means is that merchants who want to offer free shipping will either need to find ways to cut costs elsewhere, or possibly bake the shipping costs into their product pricing.

While your existing shipping strategy can be adjusted to account for the rate changes taking effect in 2020, this may also present an opportunity to rethink your shipping strategy from the ground up.

If none of the modifications fit with your pricing strategy, your margins, and your ideal conversion rates, it may be time to consider testing a new strategy—from free to flat rate shipping, or from calculated to flat rate shipping.

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