USPS Hikes Shipment Rates For 2020 Holiday Season

Words by Luhar Singh

USPS Hikes Shipment Rates For 2020 Holiday Season
USPS Hikes Shipment Rates For 2020 Holiday Season

With consumers shopping more online, logistics players are handling a surge in shipments, which in turn is straining their infrastructure, leading many to increase their price of shipping temporarily.

This week USPS became the third major logistics carrier to announce a hike in response to growing expenses associated with handling an increase in a surge of online shipments during the pandemic and the upcoming holiday season.

While the retail prices won’t directly affect retail customers, they would increase the cost of shipment of commercial packages between October 18 and December 27, 2020. 

The plan still needs to be approved by the Postal Regulatory Commission. If approved, the plan would raise the prices on the carrier’s domestic parcels, including Priority Mail Express, Priority Mail, First-Class Package Service, Parcel Select, and Parcel Return Service.

“The Governors believe these temporary rates will keep the Postal Service competitive while providing the agency with much-needed revenue,” USPS said in a press release. 

USPS’ announcement to hike its rates follows similar moves by other logistic carriers. Earlier this month, UPS said it would impose surcharges on businesses shipping more than 25,000 parcels on a weekly basis, according to Retail Dive. Similarly, in June, FedEx reportedly announced an additional 30 cent surcharge on businesses that ship over 40,000 parcels a week. Unlike UPS and USPS, however, FedEx expects these surcharges to last a lot longer.

“This is part of the new normal,” said FedEx Chief Marketing and Communications Officer Brie Carere on an earnings call in July. “It will not be just for this fiscal year, but I anticipate customers to pay more for pricing in November and December moving forward. And I do think that will be a structural shift in the market.”

While it remains to be seen how USPS’ hikes would impact shippers that have pre-negotiated agreements in place with the national carrier, these hikes are expected to impact shippers that utilize SurePost or SmartPost, a service under which USPS fulfills some of UPS’ and FedEx’s last-mile deliveries and accepts returns from their customers.  

These hikes will especially have a more significant impact on small shippers who rely on USPS as their primary carrier. According to Retail Dive, these shippers can expect to pay an additional surcharge of 25 cents per kilo on First Class packages and 40 cents per kilo on Priority Mail — costs that will significantly add up to their shipping expenses in Q4 2020.

MUST READS
No more posts to show, explore other topics: