The U.S. Postal Service said Thursday it plans to increase the prices of multiple shipping services next year as the agency grapples with lower volumes and inflationary pressures.
The rate adjustments, which will be reviewed by the Postal Regulatory Commission before they take effect Jan. 22, 2023, vary depending on the service. According to the Postal Service's filing with the Postal Regulatory Commission, the agency’s 2023 rate plans include:
- A 7.8% average increase in the prices of First-Class Package Service, known as FCPS, which mails parcels less than one pound. The Postal Service aims to expand the product offering to up to 70 pounds later in 2023.
- A 6.4% jump on average for USPS Retail Ground prices. The service is slated to be removed later next year "as part of the Postal Service's expansion of FCPS and product simplification efforts," per the filing.
- A 5.5% increase for Priority Mail and a 6.6% increase for Priority Mail Express.
- A 5.1% average hike for prices for Parcel Select, an economical ground delivery service targeting large- and medium-sized shippers.
- A 0% average change for Parcel Select Ground. The service is also set to be eliminated next year.
- Unchanged prices for Connect Local, which provides same-day and next-day delivery to businesses' local customers.
The planned rate hikes for FCPS specifically follows the overall market pricing trend of making steep percentage increases to lightweight package rates, LPF Spend Management founder Nate Skiver said in a LinkedIn post analyzing the changes. FCPS prices increased by 7.6% on average for the rate hikes that took effect this year.
"Apparel, cosmetics, jewelry, and small electronics shippers will be hit hardest," Skiver said.
The Postal Service primarily adjusts its shipping service prices according to market conditions, the agency said in its announcement. It's weathering a decline in package volumes and revenues along with increased inflationary pressures.
The agency's 2023 budget includes $1.5 billion in inflation costs over what it had planned for, Postmaster General Louis DeJoy said in prepared remarks during the Postal Service Board of Governors meeting.
"Unfortunately, with all that has been accomplished financially, our 2023 budget will not show the breakeven results we were striving for," DeJoy said. "… Having said that, the Postal Service continues to move forward with its various cost and revenue initiatives to improve."
Parcel carriers UPS and FedEx are also increasing their rates soon by 6.9% on average, with executives for both companies citing inflation as a reason for a larger hike than the year before.