USPS Zip Code Rate Increase Mimics Rural Delivery Surcharge For Priority Mail & Ground Advantage
UPDATE 9-16-24
The new USPS negotiated rates are live and so far it appears shipping to the affected zip codes has simply been raised to match existing base commercial rates.
That means sellers will see different rates for shipments going to affected zip codes versus non-affected zip codes - even for Priority Flat Rate packages - because some zip codes will still be eligible for the discounted negotiated flat rate while others will be charged the higher commercial rate.
Here's what sellers are seeing today when purchasing labels through eBay:
wastingtime101
A few entries into the eBay shipping calc and we can see how this is working.
- Shipping from any zip code to affected zip codes we are seeing USPS published commercial rates.
- Shipping from affected zip codes to non-affected zip codes we are seeing the deeper merchant rates negotiated between USPS and eBay (that answers the question I asked kyle@ebay upthread).
- Shipping from any zip code to non-affected zip codes we are seeing the deeper merchant rates negotiated between USPS and eBay.
Here are a few specific examples:
90210 CA to 01005 MA (affected zip)
Dm 10x10x10
Wt 5 lb
Ground Adv $14.16 = commercial rate90210 CA to 02108 Boston
Dm 10x10x10
Wt 5lb
Ground Adv $13.44 = discounted merchant rate01005 MA (affected zip) to 90210 CA
Dm 10x10x10
Wt 5lb
Ground Adv $13.44 = discounted merchant rateEdit to add: I ran some tests to see if affected zips have the benefit of cubic rates. They do, but they are the USPS published commercial cubic rates. Ex: dm 6x4x4 wt 10 lb Bev Hills to MA = 0.10 cu Grnd Adv to zone 8 = $8.47 vs non-cubic $19.76
While I have yet to see reports from other marketplaces or shipping providers like PirateShip or Stamps.com, given the nature of the change, it's likely it will be applied the same across all sites which have negotiated service agreements with USPS.
Online marketplaces and postage providers are warning users of new negotiated USPS rate increases going into effect September 16th for weight-based and cubic packages up to 20 lbs. with Priority Mail, Priority Mail Flat Rate, and Ground Advantage service.
Confusingly, these rate adjustments are zip code based rather than using the familiar zone structure, raising questions about whether the increase is a de facto rural delivery surcharge.
eBay provided the following announcement on the change, along with a spreadsheet with a list of zip codes that will be impacted by the rate increase, but unfortunately USPS has not provided details about what the exact amount of the increase will be.
Effective September 16, 2024, USPS will increase rates for package delivery to select zip codes. Although this increase affects a very low percentage of transactions on ebay.com, you may see a higher shipping label cost for some locations.
The increase is for weight-based and cubic packages up to 20 lbs. for Priority Mail, Priority Mail Flat Rate, and Ground Advantage delivery to these zip codes.
The eBay shipping calculator will automatically update on September 16 with the new rates.
List of zip codes as an Excel file:
List of zip codes as a searchable PDF:
Sellers said eBay's announcement was more helpful than a similar one put out by Stamps.com last month, which was vague and didn't give detailed information about which delivery areas would be affected.
Importantly, shippers should know that these changes appear to only impact negotiated rates for postage purchased through third party providers like eBay, Etsy, Pirate Ship, Stamps.com etc., not to direct retail or commercial rates from the Post Office.
However, USPS has also announced Holiday peak season price increases for Priority Mail Express, Priority Mail, and Ground Advantage direct retail and commercial rates as well.
Liz Morton
With over 17,000 zip codes on the list, how is it possible that this change will impact "a very low percentage of transactions" as eBay claims?
Sellers in the eBay community did some digging and discovered most of these zip codes appears to be in more rural or less populated areas, which could explain how they may account for a smaller percentage of overall transactions on the site.
That of course raised questions and comparisons to rural surcharges enacted by other carriers like UPS and FedEx.
Took a quick look at some of the zips on the list; they look mostly rural. Anybody else think a price change based on specific zip code rather than an entire zone is too complicated?
Stamps.com released a similar announcement a couple weeks ago but it was incredibly vague. At least this announcement from eBay explains more than stamps.com did.
I don't see anything from pirateship.com (yet).
The ZIP Codes on that list which are closest to me aren't particularly rural or inaccessible, but they are farther from the nearest major sorting center. Some of the Massachusetts ones are on the islands of Martha's Vineyard and Nantucket.
If this is the case, it would seem to be a USPS imitation of the rural surcharges imposed by FedEx and UPS. Implementation of this can't possibly be cost-effective.
Others raised questions about whether having different rates, especially for Priority Flat Rate options, was discriminatory.
This is interesting. I live in the country, zip code 27574, which is on the list. However I don't get mail at my house as I have a PO Box at 27573 which is not on the list. So definitely targeting rural country folks. 27573 is Roxboro NC which is a small little town but they don't get the increase.
I noticed Priority Flat Rate was on the announcement. So does this mean there would be 2 rates for Flat Rate ... one for the townies and one for the country folk? Doesn't that sort of sound like discrimination?
While eBay (and presumably other marketplaces) says their shipping calculator will adjust to show the correct new rates, this zip code based change will be challenging for sellers who enter their own flat rates for shipping or offer free shipping, instead of calculated.
Those sellers will likely have to try to come up with an average to bake into item prices or flat rate shipping, which will have the effect of increasing prices across the board for all consumers since there is no way to know in advance where your potential buyer may live.
Of course, sellers will also have to bake in the costs of fees on the increasing shipping as well since eBay, Etsy and other marketplaces charge their selling fees on the total including shipping - which means any time there's a shipping increase, it's a de facto fee windfall for the marketplaces too.
Meanwhile, eBay and Etsy both continue to pressure sellers to take deeper profit margin cuts to keep shipping costs low, with Etsy recently announcing shipping will soon have a greater impact in on site search ranking and placement.
Liz Morton
The marketplaces seem unwilling to take a hard look in the mirror at the ways their fee structures and advertising programs may contribute to high prices or to face the fact that no matter how you slice it, the consumer will always ultimately end up paying the price of ballooning costs of doing business.
The rate increase isn't the only bad news for postal customers in rural areas, as recent reporting from Save The Post Office reveals Postmaster General Louis DeJoy is proposing operational changes for USPS that involve slower mail in rural ZIP codes across the country.
Steve Hutkins
What do you think of the USPS zip code based rate changes? Let us know how it will impact your online buying and selling in the comments below!
