Dive Brief:
- The U.S. Postal Service plans to increase prices on various shipping services on Jan. 19, 2025, according to a Friday news release.
- The rate increases will support ongoing investments in the Postal Service's network, per the announcement. Impacted products include Ground Advantage, Priority Mail, Priority Mail Express and Parcel Select.
- The agency's board of governors believes the higher rates will keep the delivery provider competitive while providing it "with needed revenue," according to the announcement. The Postal Service's operating revenue increased 1.7% year over year to $79.5 billion in fiscal year 2024, but it posted a $9.5-billion net loss.
U.S. Postal Service rate hikes planned for Jan. 19, 2025
| Service | Rate increase |
|---|---|
| Connect Local | 5.4% |
| Ground Advantage (average) | 3.9% |
| Ground Advantage (retail) | 4.9% |
| Ground Advantage (commercial) | 3.2% |
| Parcel Select (average) | 9.2% |
| Parcel Select (delivery unit entry) | 10.3% |
| Parcel Select (hub entry) | 0% |
| Parcel Select (sectional center facility entry) | 7.1% |
| Parcel Select (network distribution center entry) | 9.7% |
| Priority Mail | 3.2% |
| Priority Mail Express | 3.2% |
Source: U.S. Postal Service. The price increases are pending Postal Regulatory Commission review.
Dive Insight:
The Postal Service's planned rate increases, pending review by the Postal Regulatory Commission, are generally lower than FedEx and UPS’ incoming hikes as the agency looks to snag market share from the delivery giants. Several increases are also lower than what the Postal Service implemented this past January, save for its Parcel Select service, which will see a higher jump on average at 9.2%.
Parcel Select relies on consolidators like DHL eCommerce to bring parcels into the agency's network for final-mile delivery, with the price dependent on the type of facility at which the package enters. The ground shipping service has undergone controversial changes this year amid reworked agreements with consolidators.
In July, the Postal Service implemented a 25% average price increase for Parcel Select despite industry group concerns, with the largest rate hikes for shipments entered at last-mile delivery units. The Parcel Select increases align with the agency's goal for shipping partners to inject volume into its network further upstream, boosting utilization in the Postal Service's own network.
"Parcel Select prices will see a somewhat higher increase of 9.2 percent on average, as we continue to align our product and pricing strategies with our operating model and goals for Parcel Select," the Postal Service said in a Postal Regulatory Commission filing on Friday.
The Postal Service also plans to introduce a fee for shipping live animals and perishable goods in January, which the agency said will cover additional handling and transportation costs tied to moving that volume. The charge will be $7.50 for shipments through its Ground Advantage and Priority Mail Express offerings, and $15 for its Priority Mail service, per the filing.
