For the second consecutive year, the U.S. Postal Service has proposed delivery surcharges for the peak holiday shipping season.
The surcharges would take effect Oct. 3, two weeks earlier than in 2020, and be lifted on Dec. 26, a day earlier than last year. Unlike last year, the surcharges will hit retail as well as commercial customers. Like last year, international shipments will not be affected.
Surcharges on Priority Mail Express shipments delivered the next day, Priority Mail shipments delivered in two to three days, and Parcel Select bulk ground deliveries will range from $1 to $5 per piece depending on the weight and the distance traveled. For example, a Priority Mail shipment weighing 21 to 70 pounds — the Postal Service’s parcel weight maximum — and traveling from 600 to more than 1,800 miles would be hit with a $5-per-piece surcharge.
The proposal must still be approved by the Postal Regulatory Commission, the independent agency that oversees the Postal Service’s pricing measure.
Parcel Select traffic moving from a local post office to residences would not experience any surcharges this cycle, the Postal Service said. The last-mile residential deliveries, which leverage the Postal Service’s mandate to serve every U.S. address, are critical to the success of millions of e-commerce merchants during the holiday season. Other delivery products will see surcharges ranging from 30 cents to $1 per piece, the Postal Service said. It declined to forecast how much total revenue would be generated by the surcharges.
The surcharges will be focused on products that utilize the entire Postal Service network from end to end. The last-mile Parcel Select product, by contrast, only uses the postal network for the move from the post office to the residence. Third-parties are responsible for inducting the bulk traffic into the postal delivery stream, at which time the Postal Service takes over.
Like private parcel-delivery carriers, the Postal Service was inundated with parcels during the 2020 peak season as the COVID-19 pandemic resulted in unprecedented online ordering and delivery demand. The Postal Service faced additional delivery challenges as FedEx Corp. (NYSE:FDX) and UPS Inc. (NYSE:UPS) placed temporary caps on pickup volumes, throwing shipping schedules out of whack and forcing large shippers to shift traffic to the Postal Service.
In an effort to head off a repeat of last year, the Postal Service has acquired 138 package-sorting machines and leased 45 more to be placed near existing processing facilities to handle package overflow. The 183 machines are expected to be in place by peak season.
The equipment purchases are part of $40 billion in capital investments that the Postal Service plans to make over the next 10 years.