Dive Brief:
- The U.S. Postal Service will not institute any peak season surcharges during the upcoming holidays, ending a practice that began in 2020, the agency announced Tuesday.
- In a media webinar, officials credited more workers moving into long-term, career positions and network investments with helping the Postal Service reduce holiday operating expenses and nixing the need for peak surcharges.
- "We are ready to handle any peak season volume in a superior and routine manner," Postmaster General and CEO Louis DeJoy said in the webinar. "That is why we will not be adding any additional surcharges for our customers this peak period. We will continue to be the most affordable way to mail and ship during the holiday season."
Dive Insight:
The Postal Service implemented peak season surcharges, a standard practice at FedEx and UPS, over the past three years to offset increased holiday operating expenses as delivery demand surged amid the COVID-19 pandemic.
Officials say those added fees are no longer necessary as the agency makes progress in its 10-year transformation plan, which aims to improve the Postal Service's financial health while also bolstering its standing versus other parcel carriers.
"Do we expect it to help us grow volume? Absolutely," Jacqueline Krage Strako, the Postal Service's chief commerce and business solutions officer, said of the lack of peak season fees during the webinar. "This is a competitive advantage."
FedEx and UPS will still levy peak season surcharges this year, starting in October. Parcel carrier OnTrac has also announced its own holiday fees. Like the Postal Service, Amazon's relaunched ground delivery service won't implement peak surcharges this year.
But cost isn't the only consideration for shippers during the holidays. Companies are also looking for carriers to maintain their on-time delivery reliability even as volumes surge.
The Postal Service has increased its processing capacity to about 70 million packages daily, up from 60 million last year, according to a Tuesday news release. It has installed 100 new sorting machines since last year's peak season and will install 47 more before the upcoming holidays, allowing workers to sort and process packages faster.
Additionally, the agency is hiring 10,000 seasonal employees to help with the projected jump in activity. However, that's fewer than the 28,000 holiday hires it aimed to make in 2022, which the agency said is due to it retaining more workers for "career positions."
A reduced reliance on third-party air transportation should make the Postal Service less vulnerable to disruptions like snowstorms that hobble airlines during the holidays, Joshua Colin, the agency's chief retail and delivery officer, said in the webinar. More than 95% of First-Class packages are currently moved via ground transportation.
