USPS is raising rates for the holiday season

As brands and retailers get ready for the holiday season, they will once again have to factor increased costs of shipping through the US Postal Service into their plans.

The postal service announced a rate increase for commercial and retail parcels for the peak holiday season on August 9 that the agency said will help to cover extra handling costs during the busiest season for package delivery. The increases will be in effect from October 2-January 23, 2023.

“The Postal Service has some of the lowest postage rates in the industrialized world and continues to offer great values in shipping,” the USPS said, in a statement. “These temporary rates will keep USPS competitive while providing the agency with the revenue to cover extra costs in anticipation of peak-season volume.”

The temporary increase must still be approved by the Postal Regulatory Commission.

Under the plans, rates will increase from 25 cents to about $6 per package, depending on size and weight. There will be no price increase for USPS Connect Local, a recently-launched program providing next-day delivery service.

While Amazon has built a vaunted logistics network, the USPS remains a key carrier for packages throughout the country, including those being delivered to complete online orders. According to the Pitney Bowes Parcel Shipping Index, USPS continued to have the highest market share by parcel volume of any US carrier in 2021. The Postal Service is also in the midst of implementing a 10-year plan to improve service and financial sustainability, called Delivering for America. The agency indicated that rate increases are in line with this plan, noting that it calls for "appropriate pricing initiatives."

In its earnings report for the quarter that ended July 1, USPS said shipping and packaging volume was down 5%, or 92 million pieces. However, the agency said it believes a shift toward ecommerce in the pandemic has permanently altered sending habits, but is still seeing a dip in ecommerce activity amid a return to more in-person activities and spending on services.

“We believe consumer behavior has evolved during the pandemic, and our Shipping and Packages volume is not expected to return to pre-pandemic levels, as the nation has increasingly relied on the safety and convenience or e-commerce,” said USPS. “However, the surge in e-commerce has continued to abate as the economy recovers. Furthermore, competition in the overall market has increased as certain major customers have returned to delivering their volume from our network and aggressively pricing their products and services to fill their networks and grow package density.”

An outline of key changes to holiday season pricing follows: