Dive Brief:
- The U.S. Postal Service plans to increase certain package shipping prices for the 2024 peak season, reinstating the practice after opting for no rate hikes last year, according to a news release Thursday.
- From Oct. 6 to Jan. 19, 2025, prices are slated to increase by an average of 6.4% for Ground Advantage, 5.5% for Priority Mail and 4.9% for Priority Mail Express, per a filing with the Postal Regulatory Commission, which will review the proposal. The Postal Service expects to bring in more than $77 million in additional revenue from the changes.
- "This temporary price adjustment is to help cover extra handling costs to ensure a successful peak season," the Postal Service said in the release.
Dive Insight:
The rate hike comes as the Postal Service is weathering continued financial losses and struggling to maintain on-time delivery reliability in the thick of its 10-year "Delivering for America" transformation plan. For the third quarter of fiscal year 2024, which ended June 30, the agency posted a $2.5 billion net loss.
Agency officials said last year that the peak season price increases were no longer necessary as the Postal Service made progress with "Delivering for America" and trimmed operating expenses, a decision it expected would attract more volume.
But any competitive advantage from no holiday rate increases in 2023 apparently wasn't enough for the Postal Service to hold off on price bumps for a second consecutive year. The reinstatement aligns the agency with other carriers like FedEx and UPS, which have leveraged their own peak season fees each year.
"This seasonal adjustment will bring prices for the Postal Service’s commercial and retail customers in line with competitive practices," the agency said in the release.
The rate hikes will not impact the Postal Service's Parcel Select service, which is used by workshare partners like DHL eCommerce and UPS Mail Innovations to complete the delivery process for their customers. The agency hit Parcel Select with a 25% average price increase in July.
No peak season Parcel Select rate increase may result in workshare partners not implementing any holiday surcharges of their own, or at least rolling out lower-than-normal fees, Nate Skiver, founder of parcel consultancy LPF Spend Management, said in a LinkedIn post.
