The U.S. Postal Service on Tuesday proposed surcharges on domestic package delivery during the peak holiday season to cover extra handling costs, following the lead of large parcel carriers such as FedEx and UPS, which annually add holiday premiums.

The announcement adds to the mounting cost pressures shippers have faced this year, particularly since the Iran war choked off many Middle East oil supplies and drove up fuel prices. Parcel shippers have been feeling the cumulative impact of add-on fees all year: increases in fuel surcharges and new fees for heavier packages and premium services helped push ground and express parcel costs up 5% to 6% in the second quarter, according to a report from AFS Logistics and TD/Cowen investment bank. Analysts say many businesses are switching to independent carriers to hold the line on rising costs.

Under the proposal, rates for Priority Mail, Priority Mail Express, Ground Advantage and Parcel Select services would rise 6% from Oct. 4 through Jan. 17, 2027. Last year's peak-season surcharge ran about 4% to 5%, depending on the product. Ground Advantage and Parcel Select are among the services most used by e-commerce shippers, meaning online sellers that rely on USPS for residential delivery would see the fee layer directly onto their shipping costs during the busiest weeks of the year.

The Postal Service said the temporary price adjustment would bring rates for retail and commercial customers in line with competitors and help the organization meet financial targets so it can remain solvent amid rising costs and declining mail volume. The Postal Regulatory Commission must first review and approve the rate increase before it can take effect.

In April, the Postal Service applied an 8% surcharge on parcel shipments to cover rising fuel and transportation costs. That fuel surcharge is also scheduled to remain in place until Jan. 17.

Carriers impose peak-season surcharges because costs, shipment handling, staffing and equipment all increase to maintain service levels.

FedEx last month unveiled its domestic demand surcharges for the peak shipping season, layering them on top of accessorial charges that have risen since last year. Those fees, which are higher than the prior year, run from Oct. 26 to Jan. 17. International peak surcharges, which include an $8.80 additional handling fee and a $95.75 charge for oversize parcels, take effect Sept. 21 and continue until Feb. 7. FedEx (NYSE: FDX) said the surcharge helps cover the cost of securing additional air and truck capacity during a period of high demand and higher operating costs. The largest percentage increases hit some of the most common delivery categories used by e-commerce shippers.

"Peak season is increasingly becoming a collection of different pricing windows rather than one uniform holiday period," consultancy LJM said on LinkedIn. It recommended that shippers review historical package characteristics and identify those likely to trigger the charges. With the Postal Service's proposal now pending before the Postal Regulatory Commission, the timing of any approval will determine whether shippers face the new USPS fees alongside the FedEx and UPS windows that already begin in early October.

UPS on Aug. 26 revealed its holiday surcharges. The surcharges are higher than last year, run Oct. 4 through Jan. 17, and are on top of an 8% fee applied in April.

DHL Express, in a rare industry reversal, on Aug. 3 cut its fuel surcharge index by a flat 2 points for export and import shipments, along with associated surcharges.

Source: FreightWaves