USPS plans rate increases for some shipping services in 2023

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The US Postal Service said Thursday it plans to raise prices on several mailing services over the next year as the agency grapples with lower volumes and inflationary pressures.

Rate adjustments, which will be reviewed by the Postal Regulation Commission before they come into effect on January 22, 2023, vary by service. According to the Postal Service’s filing with the Postal Regulatory Commission, the agency’s 2023 rate plans include:

  • An average price increase of 7.8% for the first-class parcel service known as FCPS, which sends packages weighing less than a pound. The postal service intends to expand the product offering to up to £70 later in 2023.
  • An average 6.4% increase for USPS retail base prices. The service is slated to be retired later next year “as part of the expansion of the FCPS and efforts to simplify products by the Postal Service,” the filing said.
  • A 5.5% increase for Priority Mail and a 6.6% increase for Priority Mail Express.
  • An average price increase of 5.1% for Parcel Select, a low-cost ground delivery service aimed at large and medium-sized shippers.
  • An average change of 0% for Parcel Select Ground. The service is also scheduled to be abolished next year.
  • Unchanged prices for Connect Local, which offers same-day and next-day delivery for local business customers.

The planned rate increases for FCPS specifically follow the broader market pricing trend of making steep percentage increases in light packet rates, LPF Spend Management founder Nate Skiver said in a LinkedIn post analyzing the changes. FCPS prices rose an average of 7.6% during this year’s rate hikes.

“Shippers of apparel, cosmetics, jewelry and small electronics will be hit the hardest,” Skiver said.

The post adjusts its prices for shipping services primarily to market conditions, the agency said in its announcement. It is weathering a drop in parcel volume and revenue along with increased inflationary pressures.

The agency’s 2023 budget includes inflation costs of $1.5 billion above what it had planned, Postmaster General Louis DeJoy said in prepared remarks during the Postal Service Board of Governors meeting.

“Unfortunately, after all that has been achieved financially, our 2023 budget will not show the balanced results that we were aiming for,” DeJoy said. “…Aside from that, the Postal Service continues to advance its various cost and revenue initiatives to improve.”

Parcel service providers UPS and FedEx are also soon to increase their rates by an average of 6.9%, with executives at both companies citing inflation as the reason for a larger increase than last year.

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