Changes at USPS, How They Affect Consolidator Carriers and Ecommerce Shippers

This post was written by Shawn Compton , VP of Transportation at DCL Logistics

The Postal Service made significant changes to their services in late 2024, and the carrier landscape is just now beginning to see the ripple effects.??

After losing $9.5 billion in 2024, USPS is clearly looking for ways to build more resilience—especially considering the new business-friendly incoming US president. Some speculate that these changes are building services outside of the scope of the USPS mission, competing with and potentially harming the private carrier sector.??

An Outline of Recent Changes at for Parcel Select Service at the USPS??

1. Eliminated Parcel Select Lightweight. There is no longer ounce-based pricing for parcels under 1 lb. (Parcel Select Lightweight). All pricing is now pound-based (Parcel Select).??
2. New Negotiated Service Agreements (NSA’s) have eliminated and/or changed the DDU (Destination Delivery Unit) level discount for carriers. The consolidator carrier services that use USPS for the final delivery of packages (DHLeCommerce, UPS SurePost, UPS Mail Innovations, OSM) can no longer hand-off parcels to USPS at the DDU level (which offered a deep discount and faster transit times) but will now inject parcels further upstream in the USPS network.??
3. USPS has begun offering ounce-based pricing on the USPS Ground Advantage service.???
4. USPS will no longer honor dual shipping labels (those that include USPS and another carrier on the label).??

Although these changes went effect, the dates may vary by carrier depending on when their Negotiated Service Agreements terminate.???

Immediate Effects on the Carrier Landscape??

An after effect of the Postal Service changes meant contract re-negotiations with all consolidator carriers using USPS delivery for the final mile, here is a high-level overview of how the major consolidators each handled this.??

UPS SurePost no longer uses USPS for final delivery??

As of December 31, 2024, UPS SurePost has ended their contract with USPS. This means UPS is now absorbing the final mile volume previously delivered by the USPS.??

A significant impact is that UPS SurePost no longer delivers to PO Boxes, APO or FPO addresses?

January rate increases:???

• 10% increase for packages over 1 lb.??
• DAS (+61.8%) and EDAS (+69.4%) changed to match cost of UPS Ground?

UPS Mail Innovations?

As stated above, UPS has not signed an updated NSA with USPS. The future of the Mail Innovations service is very much in question. The change to the consolidator model, and the pricing, is sure to have a negative impact.?

• January rates increased 25%??

FedEx Ground Economy increased costs just because!??

FedEx apparently saw the UPS cost increases and raised their DAS and EDAS prices to match; not because they had to change (they had already internalized the delivery), but because they can.??

Other prominent consolidators, like OSM Worldwide and DHLeCommerce?

OSM and DHLeC both signed new NSA’s with the USPS, like many other consolidators, but with differing terms as it relates to the time and exclusivity. Where at one time most NSA’s were likely very similar, we expect to see a totally different landscape emerge.?

How these Changes are Affecting Ecommerce Shippers?

The ripple effects of these changes and others will certainly shape the shipping industry, now and for the remainder of this year. It’s too early to tell how ecommerce shippers will be affected but here are a few predictions that merchants will face in the coming months.??

• Delivery times will be affected as USPS and the consolidators figure out how to take on the volume that they are now responsible for. Transit times will likely see delays or at least be more volatile in Q1.??

• New processes will need to be communicated to customers to accommodate these service changes. For example, UPS SurePost no longer delivers to P.O. Boxes and military addresses, merchants will need to figure out new processes to deal with this variation.??

• Costs are a big consideration for ecommerce businesses utilizing consolidators, as the afore discounted rates to use USPS have now gone away. Shippers will need to deeply understand their shipping invoice to know if more of the shipping costs need to be passed to customers, or not.??

As the effects of these USPS changes continue to unfold, ecommerce shippers will benefit from maintaining a diverse carrier portfolio. Relying on a single shipping solution is now riskier than ever, as shifting contracts, pricing models, and service disruptions create uncertainty. By leveraging multiple carriers, businesses can optimize costs, reduce transit delays, and ensure reliable delivery options for customers. Flexibility will be key in this evolving landscape, and those who proactively diversify their shipping strategies will be best positioned to adapt and thrive.?