US Postal Service Proposes Hiking Shipping Rates During Holiday Season
The U.S. Postal Service announced Tuesday it wants to raise the rates for sending packages during the holiday season, saying the increases would cover the anticipated heightened package and shipping demand, which typically brings extra handling costs for the agency.
If approved by the Postal Regulatory Commission, the new rates would be in effect from Oct. 3 to Dec. 26. The proposed increases — ranging from 25 cents to $5 — are similar to those approved during the 2020 holiday season.
"These temporary rates will keep the Postal Service competitive while providing the agency with the revenue to cover extra costs in anticipation of peak-season volume surges similar to levels experienced in 2020," the USPS said in a press release Tuesday.
Our Take: Last year's rate increase helped get the Postal Service into the black with a net quarterly profit for the first time in several years, but the agency has suffered overall as revenue from mail services has slowed. In 2020, the Postal Service's total volume of packages rose to 7.3 billion, up from 6.2 billion in 2019, driven in part by the increase in e-commerce orders during the pandemic.
If consumers' holiday shopping trends bear any semblance to 2020, retailers will have to absorb the brunt of these increased shipping rates as consumers' online purchase activity soars. And with more customers expecting free shipping for their online purchases, due in part due to Amazon Prime membership rates, retailers will increasingly need to offer online shoppers free shipping to compete, which could spell trouble for their bottom lines.
In addition, retailers are also bracing for the Postal Service to be slow again in its delivery times. The agency said it would add to the expected time it takes to deliver certain First Class mail and periodicals starting in October.