U.S. Postal Service imposes first-ever surcharge due to rising fuel prices

The USPS is implementing an 8% surcharge on parcels for the first time amidst escalating fuel costs and growing financial pressures.

The United States Postal Service (USPS) this week submitted a filing to the Postal Regulatory Commission (PRC) requesting approval for a temporary price adjustment related to shipping costs. If approved by the regulatory body, many parcel services will incur an additional 8% charge from 26/4 until 17/1/2027. This new surcharge will apply only to parcels, not to standard mail. For example, the current cost to send a medium priority parcel is USD 22,95, projected to increase to USD 24,80 from the end of April, while the price of a standard stamp for letters under 30g will remain at USD 0,78.

This move comes amid a sharp increase in fuel prices across the United States. Diesel prices in the U.S. this week reached USD 5,38 for over 3,7 liters, marking a 51% rise compared to the same period last year. The USPS stated that the additional fee aligns with industry practice and will help adjust shipping costs to better reflect market conditions. This surcharge covers vehicle maintenance and insurance expenses, as well as fuel costs.

“We have always been resolute in avoiding surcharges,” the agency stated, adding, “This fee is still less than one-third of the fuel surcharges other carriers collect from customers.” Carriers such as FedEx and UPS have implemented fuel surcharges for many years, alongside various other fees. Both companies recently increased their surcharges in recent weeks due to surging oil prices stemming from the conflict in the Middle East.

The USPS faces long-term financial challenges. Postmaster General David Steiner informed Congress in early March that the agency would deplete its cash reserves in less than one year without significant reforms. He also urged Congress to support other reforms, including changes to pension fund calculations, financial obligations, workers' compensation insurance, and pension fund investment strategy.

The WSJ reported that Amazon, the largest customer of the USPS, plans to significantly reduce the volume of parcels shipped through the agency. This move could result in billions of USD in lost revenue for the USPS. Amazon has already begun decreasing its shipments via USPS and anticipates further cuts in the second half of this year.

Since 2007, the USPS has reported cumulative net losses totaling USD 118 billion. The primary reason for this is the decline in regular mail volume, its most profitable business segment, to record lows not seen since the late 1960s. The agency's losses also stem from its legal obligation to deliver to over 170 million addresses six days each week. Approximately 71% of its delivery routes are operating at a loss, while three-fifths of post offices do not generate sufficient revenue to cover operating expenses.