U.S. Postal Service Plans 'Peak' Surcharges for Domestic Parcels -- 2nd Update
August 14 2020 - 4:08PM
Dow Jones News
By Paul Ziobro
The U.S. Postal Service plans to add new fees onto commercial
packages starting in October as it looks to offset the increased
expenses from coronavirus and surge in volume expected from online
shoppers during the holidays.
It's the first time that the Postal Service has implemented
surcharges during the holiday season, a spokeswoman said, and
follows similar steps that United Parcel Service Inc. and FedEx
Corp. have used in the past to offset costs during the busiest
shipping period.
The new fees would add to costs for Amazon.com Inc., Target
Corp. and other big holiday shippers.
The surcharges on domestic commercial deliveries will run from
Oct. 18 through Dec. 27, and will apply to all of its competitive
package services. They range from 24 cents a parcel up to $1.50. It
won't apply to retail or international shipments, or regular mail
services.
The proposed fees, which still need approval from the Postal
Regulatory Commission, come as carriers have been overwhelmed with
shipping volume during the coronavirus pandemic. Now they are
trying to offset costs and manage capacity with new fees and higher
rates.
UPS last week disclosed its own surcharges for peak season
shipments that industry consultants said were higher than
anticipated. FedEx is also evaluating what fees it will charge
shippers ahead of the holidays, according to people familiar with
the matter.
Both UPS and rival FedEx Corp. have been charging peak
surcharges in recent months, a practice they typically enforce
during the year-end holidays. Meanwhile, the Postal Service has
come under recent fire from politicians and some customers for
delivery delays as its new leader starts to restructure its
operations.
The Postal Service, in announcing the proposed fees, said that
the limited-time surcharge is "in line with competitive practices
without impacting customers at the retail level."
"In doing so, the Postal Service is protecting the consumer
during a vulnerable economic period while increasing prices on
commercial volume during heightened volume levels," the agency
wrote.
The surcharges will help the agency raise revenue at a time the
Postal Service's finances strained and it has come under increased
scrutiny under new Postmaster General Louis DeJoy, a Republican
fundraiser and logistics executive who took the role in June.
The Postal Service lost $2.2 billion in the quarter ended June
30, as a big increase in package shipments wasn't enough to offset
plunges in its more profitable marketing and first-class mail
division.
Mr. DeJoy has moved quickly to enact changes to the Postal
Service, including limiting overtime hours in some areas that have
caused some mail disruption and a reorganization of the agency's
senior leadership.
The Trump administration has been pushing the Postal Service to
raise rates, arguing that it charges too little to deliver packages
to homes for Amazon and other large shippers.
Higher prices at the Postal Service could also benefit FedEx and
UPS as it would give the private carriers leeway to raise their
prices more, industry analysts say.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
August 14, 2020 15:53 ET (19:53 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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