In a welcome announcement for holiday shippers and consumers alike, the United States Postal Service (USPS) has declared that it will not impose peak surcharges during the upcoming holiday season. This decision, a departure from the practice of the past three years, comes as the agency reports progress in its 10-year transformation plan, which aims to strengthen its financial health and competitive position in the parcel carrier market.
Peak season surcharges, a common practice among private carriers such as FedEx and UPS, were introduced by the USPS to offset escalating operational costs during the holiday period, driven by surging delivery demand brought on by the COVID-19 pandemic. However, agency officials now assert that these additional fees are no longer necessary.
The USPS attributes this change to several key factors. First, the agency has witnessed an influx of workers moving into career positions, which has contributed to improved operational efficiency. Second, strategic network investments have enhanced the Postal Service’s ability to manage increased holiday demand without resorting to surcharges.
Jacqueline Krage Strako, the Postal Service’s Chief Commerce and Business Solutions Officer, expressed optimism about this decision during a recent webinar. She stated, “Do we expect it to help us grow volume? Absolutely. This is a competitive advantage.”
While the USPS has opted to forgo peak season surcharges, FedEx and UPS have confirmed that they will continue to implement such fees starting in October. Parcel carrier OnTrac has also announced its own holiday surcharges. Interestingly, Amazon, a prominent player in the e-commerce industry, has chosen not to impose peak surcharges for its relaunched ground delivery service this year.
The decision to eliminate surcharges is not solely based on cost considerations. Shippers are increasingly focused on carriers’ ability to maintain on-time delivery reliability, especially as holiday volumes surge.
To address this, the USPS has made substantial investments to bolster its capabilities. The agency has expanded its processing capacity to approximately 70 million packages daily, up from 60 million the previous year. Furthermore, it has deployed 100 new sorting machines since the last holiday season, with plans to install an additional 47 machines before the upcoming holidays. These investments will enable USPS workers to sort and process packages more efficiently.
Additionally, the Postal Service is hiring 10,000 seasonal employees to assist with the anticipated surge in holiday activity. It’s worth noting that this hiring number is lower than the 28,000 seasonal hires initially targeted for 2022. The reduction is attributed to the USPS retaining more workers for “career positions.”
A notable aspect of the USPS’s strategy is its reduced reliance on third-party air transportation. By moving more than 95% of First-Class packages via ground transportation, the agency aims to make its operations less susceptible to disruptions caused by factors like snowstorms, which can severely impact airlines during the holiday season. Joshua Colin, the USPS’s Chief Retail and Delivery Officer, highlighted this strategic shift during the webinar, emphasizing the benefits of ground transportation for stability and reliability.
As the holiday season approaches, the USPS’s decision to waive peak season surcharges reflects its commitment to providing cost-effective and reliable shipping services to meet the needs of consumers and businesses across the country. With increased processing capacity, investments in technology, and a focus on retaining career workers, the Postal Service is gearing up for a busy and competitive holiday season.
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