For the first time since 2019, the U.S. Postal Service will not impose any parcel-delivery surcharges during the upcoming peak holiday delivery season, agency officials said Tuesday.
According to postal officials, part of the reason the agency can avoid surcharges is that its peak costs will not be as high as in years past. For example, it plans to hire only 10,000 seasonal employees, the lowest seasonal number in years. By contrast, Amazon.com Inc. (NASDAQ: AMZN) plans to hire 30,000 seasonal logistics workers in California alone as part of its projected 250,000 seasonal hires.
The Postal Service said it has already filled 150,000 full-time jobs under its 10-year Delivering for America initiative launched in 2021. As a result, it said it doesn’t need to bring on a large number of seasonal employees to fill the holiday demand gap.
In an e-mail, Rob Martinez, founder and co-CEO of Shipware LLC, a consultancy, said he was surprised by the move given Postmaster General Louis DeJoy’s desire to raise rates to maximum allowable levels at other opportunities. Martinez also said the Postal Service should have announced its action at least a month ago before parcel shippers entered into discussions with other carriers about discounting their peak surcharges.
Many shippers have already factored in peak surcharges to their shipping budgets, and will now be scrambling to analyze the impact of the Postal Service’s announcement, Martinez said. “Many that might have taken advantage with an earlier announcement are too far down the road” with other carriers to chance course now, he said.
Additional parcel capacity
Separately, the Postal Service said it has added 10 million parcels’ worth of daily processing capacity since last peak, bringing its daily capacity to 70 million parcels. Since 2020, the Postal Service has nearly tripled its daily processing capacity. It said that the capacity increases will speed the movement of packages and eliminate the need to lease temporary annexes for processing.
The additional capabilities will add to the overcapacity situation in the parcel-delivery industry. That is good news for parcel shippers because there should be plenty of peak capacity at lower rates.
For the second consecutive holiday, the Postal Service will utilize an early morning delivery program in markets with above-average peak volumes. Under the program, parcels in select markets will be delivered between 6 and 9 a.m. to reduce the volume of deliveries during regular hours of operation.
New this holiday will be the Postal Service’s Ground Advantage program, which was rolled out in July. The Postal Service merged three ground delivery products into the new brand offering two-to-five-day transit times with pound-based, ounce-based and cubic pricing options for parcels weighing up to 70 pounds.
The three products merged are First-Class Package Service, targeted at merchants shipping parcels under 1 pound, Parcel Select Ground, targeted at shipments weighing between 1 and 70 pounds, and Parcel Select Ground Cubic, which sets prices based on the parcel’s cubic dimensions and handles weights between 1 and 70 pounds.
The product is aimed at shippers willing to sacrifice speed for price. It is also intended for users of the Postal Service’s Priority Mail service, who need two-to-three-day transit times but don’t want to pay Priority Mail’s pound-based prices.
About 95% of first-class parcels move via the Postal Service’s ground network. Still, much of the agency’s vast ground network remains underutilized, with mail and parcels filling up in total about a third of capacity. The Postal Service is in the process of shifting large volumes from an air network operated by passenger and all-cargo airlines to its less expensive ground delivery system.