OPERATIONS

Amazon to face higher shipping charges under proposed Postal Service prices hikes

BY Marianne Wilson

The last mile of package delivery is likely to be get more expensive come the new year.

The U.S. Postal Service is seeking record price hikes, including up to a 12.3% increase in shipping charges for the parcel select delivery service used by Amazon and such companies as FedEx.

The USPS proposed a 9.3% increase on the service for packages weighing over one pound and a 12.3% increase on lighter packages. According to Barclays, Amazon’s retail operating income could drop 5% if the proposed hikes go into effect, reported Marketwatch.

In addition, the Postal Service is also seeking a 5-cent increase in the price of a First-Class Mail Forever stamp, from 50 cents to 55 cents, and a 10% hike in first-class stamps. Priority Mail would increase by an average of 5.9%.

The proposed hikes come as President Donald Trump has frequently criticized the Postal Service for losing money by not charging higher shipping rates for online retailers, notably Amazon. However, industry experts credit the Post Service’s mounting financial losses to the ongoing drop in physical mail volume in a digital age along with heavy pension obligations for retirees.

The request to raise prices was made by the USPS’ board of governors. The proposed increases, would take effect on January 27, 2019, have to be approved by the Postal Regulatory Commission.

“The Governors believe these new rates will keep the Postal Service competitive while providing the agency with needed revenue,” the USPS stated in a release. “The Postal Service has some of the lowest letter mail postage rates in the industrialized world and also continues to offer a great value in shipping.”

The complete Postal Service price filings with the new prices for all products can be found on the PRC site under the Daily Listings section at https://www.prc.gov/dockets/daily (see listing for Oct. 10).The price change tables are available on the Postal Service website at https://pe.usps.com/PriceChange/Index.

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