The United States Postal Service (USPS), bowing to political headwinds, is proposing a 9 to 12 percent increase in shipping rates for the agency’s Parcel Select services that cater to parcel delivery providers Amazon, FedEx, UPS, and others.
The postal agency was quick to point out that the rate increase is not a response to Trump criticism. From our Supply Chain Matters viewpoint, the move is indeed a likely response to prior direct criticism from President Trump claiming the Amazon was ripping off the postal agency. The agency reportedly is proposing a 9.3 percent increase for parcels weighing over one pound, and a 12.3 percent increase on lighter packages.
In addition to Parcel Select, the agency is looking to raise rates on Priority Mail Express by 3.9 percent, and a 5.9 percent increase on Priority Mail services, and a 10 percent increase on first-class stamps for regular mail.
The new rate structures are planned to take effect in late January, after this year’s surge holiday delivery period.
As we have pointed out in our previous USPS focused commentaries, energy is better channeled in influencing the U.S. Congress and the White House to ensure that the postal service has the mission and the required resources to be an integral and profitable domestic last-mile services provider. That includes overcoming current financial structural obstacles related to pension accounting, staffing an objective Board of Governors experienced in transportation services and allowing the current Postmaster General and CEO the ability to successfully carry out the agency’s mission without constantly having to deal with political or individual legislator agendas. One obvious not so hidden agenda is privatization of the agency.
Since the President’s direct criticisms in April, Amazon has aggressively moved forward in deploying its own network of independent parcel delivery firms branded as Amazon Prime, for last-mile delivery. In its recent contract renewal negotiations with the Teamsters labor union, UPS has moved forward with intent to schedule parcel deliveries that cover both Saturday and Sunday deliveries, a service that the USPS was able to leverage effectively with E-Commerce and parcel delivery firms.
While the USPS had made positive strides in growing parcel delivery volumes to compensate for declines in first-class and bulk mail, political agendas once again can overrule economics. Such agendas can overlook the realities of a delivery network that can reach every address across the United States. While the politics focus on the large parcel carriers and Ecommerce firms, smaller businesses once gain face the burden of increased parcel shipping rates from all carriers.
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