On January 19th, 2025, the United States Postal Service (USPS) implemented a significant shipping rate increase for their Priority Mail, Priority Mail Express, Ground Advantage, and Parcel Select delivery services. The increases come as part of the 10-year "Delivering for America" plan, an effort to improve the USPS's financial sustainability and its operability. The exact amounts of the increase vary according to parcel size, service type, location, and other factors, but both the rate hikes and network reorganization are leaving businesses asking, "How will this affect me?".
In this comprehensive guide, we'll take a deep dive into the what and the why behind the USPS shipping rate increases. We'll review some of the price changes you can expect as well as how the network restructuring could impact your parcel delivery and how it could affect your operations. We'll also look at some steps businesses are taking to navigate the changing shipping landscape — and how QuickBox is here to partner with you each step of the way.
E-commerce has grown rapidly over the past decade, with annual revenue rising from 1.5 trillion USD in 2015 to over 6.3 trillion in 2024. The result has been an increase in demand placed on the USPS for parcel delivery, straining their operability to the limit.
The "Delivering for America" plan was designed to address the inefficiencies and excess costs caused by such high demand, but it's unclear whether it will result in streamlined operations and solubility, or if further problems are likely to ensue. Here's a look at the what and the why behind the USPS shipping rate increases, so that you'll understand what's to come.
The plan includes changes to both the USPS shipping network design and their delivery processes, with the aim of improving costs and reducing delays. Here are the details:
The plan entails a series of price increases for several parcel delivery methods. First Class Mail Parcel has been renamed Ground Advantage, which has increased by 3.9%. Parcel Select delivery has also increased by 9.2%, resulting in substantially higher shipping costs for packages over 1lb.
The price increases are accompanied by an elimination of incentives for the use of local post offices or Destination Delivery Units (DDU), further increasing delivery costs — especially for lightweight packages. Parcels weighing under 1 lb may see up to a 41% increase in their average shipping expenses, with the greatest increases coming to those weighing less than 10 ounces.
The plan goes beyond shipping prices and seeks to alter the mechanism by which parcels reach the consumer. The facilities that will be restructured are:
There are two major changes coming to these facilities. First, the number of RPDCs is expected to grow from 8 to 60 — despite their current subpar performance. Second, there are too few S&DCs to accommodate the parcel volume that previously entered all those DDUs are now entering already backlogged SCF facilities, creating operational bottlenecks. The result so far has been not only an increase in prices, but an operational bottleneck creating longer shipping delays.
USPS has faced significant financial challenges in recent years, losing over $6 billion annually as their focus shifted away from traditional mail to handling parcels. For nearly 15 years, USPS didn't optimize its operations for parcels under a pound, relying heavily on consolidator programs to manage volume. Now, USPS is out of cash and struggling to scale its network to handle the growing parcel demand effectively.
These changes are aimed at regaining control of their operations and revenue, but they come with risks. If the USPS network fails to handle the increased volume or customer churn, it could result in further financial strain, leaving them in an even worse position. The critical question is whether their plan will succeed without disrupting the entire parcel delivery ecosystem, which is not a realistic optimal look into the future.
It's not just that USPS shipping rate increases that can impact your business — its the network redesign that comes with it.
The "Delivering for America" plan is intended to improve the USPS's solubility and streamline its operations, but so far we've seen the opposite. Prices have risen for consolidators (a cost that will eventually be passed on to consumers), and shipping delays have been on the rise ever since its implementation. The results for your business could be:
Higher costs. On average, consolidator postal rates have increased by well over 10%. The numbers vary by industry, but shipping expenses make up 5–15% of the total order value for the average e-commerce company, so these shipping rate increases can have a major impact on the bottom line. The largest cost increases are for small parcels of under 1 lb, so merchants selling lightweight products are likely to experience the largest financial burden.
Longer delivery times. As shipping networks are restructured and regional facilities continue to struggle with capacity, shipping bottlenecks create delays of 1–3 days. This is due to the increased number of hands that each parcel must pass through before it reaches its destination, yet the USPS plans to continue the implementation of their structural overhaul — despite ongoing declines in operational performance.
Higher shipping prices, more delays, fewer satisfied customers — all of these factors can damage your profitability and even tarnish your brand image.
If they hope to mitigate the damage done by rising USPS shipping costs, companies may need to rethink their shipping strategy. They could choose to find alternative carriers that can complete their last-mile delivery, and larger businesses could simply absorb the added expense. That's not an option for many new startups or small to midsized businesses (SMBs), though, so leveraging a third-party logistics (3PL) provider could be the answer.
At QuickBox, we're committed to helping our customers overcome their shipping challenges and deliver the products to consumers at the price and speed they demand. Here's what we're doing to address the USPS shipping rate hikes:
Carrier selection. QuickBox is leveraging national carrier partners in the areas most cost effective for clients while maintaining your service expectations. We're shifting to a reduced postal reliance in our carrier mix for improvement in service and cost reductions to help reduce the impact caused by the USPS updates, and we've already sent out rate cards for service providers to address the rate hikes that went into place on January 19th, 2025.
Local and regional delivery. Our customers have the opportunity to choose from a wide number of carrier options, including local and regional delivery partners. Some of these are postal entry and non-postal final-mile delivery options, enabling your packages to arrive at customers' doors sooner.
Strategic locations. When companies work with 3PL partners, they gain access to their strategically located fulfillment centers that minimize the distance between their products and their consumers. This reduces the cost of transit, helping them offset any potential increases in shipping rates.
Taken together, our diverse selection of cost-effective national, regional, and local delivery partners and our network of fulfillment centers help our clients get their packages to the consumers on time, and at a price they can afford. While we once relied heavily on USPS for parcel delivery, our comprehensive 3PL infrastructure has enabled us to reduce our USPS dependence down to 20% by working with alternative last-mile carriers who are exempt from the shipping rate increases, keeping your costs to a minimum.
QuickBox understands the impact that USPS shipping rate increases are likely to have both on merchants and their consumers, and our commitment to helping them overcome their logistics hurdles remains. With challenge comes new opportunity, and the QuickBox parcel team is continuously innovating to find new solutions that will keep your shipping costs low and your shipping speeds high.
We're excited to partner with you and grow through 2025 despite these tumultuous times, so contact us today to see how we can help you continue to scale.