Dive Brief:
- The U.S. Postal Service proposed price hikes on letters, postcards and parcels, designed to "keep the Postal Service competitive while providing the agency with needed revenue," the agency said.
- Rate increases on parcels range from $0.70 to $1.05, depending on the size of the package. First-Class Package Service, often used by businesses for fulfillment, will switch to zone-based pricing.
- USPS said it will not add surcharges for fuel or holiday deliveries. If approved by the Postal Regulatory Commission, the price changes would take effect Jan. 27, 2019.
Proposed price increases for parcel deliveries
| Product | Current | Proposed |
|---|---|---|
| Small Flat Rate Box | $7.20 | $7.90 |
| Medium Flat Rate Box | $13.65 | $14.35 |
| Large Flat Rate Box | $18.90 | $19.95 |
Source: U.S. Postal Service
Dive Insight:
In some cases, retailers and third party logistics providers (3PLs) complete their own last-mile deliveries and have devised innovative solutions to fulfill this challenging part of the supply chain.
Even so, the Postal Service remains an integral part of the last mile, as many packages are dropped at postal locations and sent through the final mile via USPS.
By law, USPS is required to deliver to all U.S. postal addresses, no matter the geography or density of a region, making the agency "an ideal partner" for 3PLs, Michael Notarangeli, Executive VP of Maine Pointe, previously told Supply Chain Dive.
USPS does not receive tax dollars to cover its operating expenses and relies solely on sales from postage and services. Due to that structure, many believe the agency is at a financial disadvantage and must increase rates to cover their costs.
But not everyone agrees with that sentiment.
Several retailers, including Amazon, QVC and Columbia Sportswear, have formed a group known as the Package Coalition and lobbied against increases to parcel delivery prices. The coalition argues USPS package delivery services are already profitable.
The Postal Service is required by law to ensure that the prices for its package delivery services cover their costs. According to the Postal Regulatory Commission, USPS package delivery services have been profitable for the past 7 years. #PackageCoalition pic.twitter.com/iKoNmDpyMG
— Package Coalition (@PkgCoalition) October 4, 2018
