Dive Brief:
- The U.S. Postal Service will temporarily raise prices on commercial parcels from Oct. 18 to Dec. 27, the agency said in a news release Friday. The increases are pending approval by the Postal Regulatory Commission.
- The price hikes come in response to "increased expenses and heightened demand" for e-commerce parcel delivery due to the pandemic, USPS said.
- Parcel rates will increase by at least 24 cents, as outlined in the table below.
| Product | Current starting price | Planned increase |
|---|---|---|
| Parcel Select Destination Delivery Unit (DDU) |
$3.19 | 24 cents |
| Parcel Return Service | $3.05 | 24 cents |
| Parcel Select Lightweight | $1.81 | 24 cents |
| FCPS Commercial | $2.74 | 25 cents |
| Priority Mail Commercial | $7.02 | 40 cents |
| Parcel Select Ground | $6.92 | 40 cents |
| Parcel Select DSCF | $4.37 | 40 cents |
| Parcel Select DNDC | $5.98 | 40 cents |
| Priority Mail Express Commercial | $22.75 | $1.50 |
Source: USPS
Dive Insight:
E-commerce volumes during the pandemic have stressed logistics capacity, leading to surcharges and price hikes for shippers sending parcels through these networks.
UPS announced higher peak surcharges coming this holiday season for shippers moving at least 25,000 parcels weekly. FedEx peak surcharges announced in June are in effect until further notice.
The USPS rate increases will affect a large breadth of shippers, given the Postal Service's ubiquity in last-mile deliveries. UPS feeds some of its B2C deliveries through USPS via SurePost. FedEx does the same through SmartPost, although the carrier plans to integrate SmartPost into FedEx Ground by peak season.
It is not immediately clear if or how the rate changes may affect shippers with negotiated-service agreements, which are often exempt from temporary price changes. But impacted shippers using SurePost or SmartPost will see increases in their rates, according to Nate Skiver, founder of consulting firm LPF Spend Management.
"For small shippers who rely upon the USPS as their primary carrier, these surcharges ($0.25/pkg First Class Package, Priority Mail $0.40/pkg) will have a significant impact on Q4 shipping expense," Skiver wrote on LinkedIn.
The rate increases come as USPS endures months-long financial struggles, warning Congress it could "run out of cash" by the end of September.
"The Governors believe these temporary rates will keep the Postal Service competitive while providing the agency with much needed revenue," USPS said in a statement.
