The United States Postal Service (USPS) has proposed to raise prices across shipping services as the agency racked up more losses throughout 2024 and saw declining volumes in first-class mail delivery.
The change would raise USPS Shipping Services prices approximately 3.2 percent for Priority Mail service and Priority Mail Express service, 3.9 percent for USPS Ground Advantage and 9.2 percent for Parcel Select. The proposed changes would take effect Jan. 19, 2025, if approved by the Postal Regulatory Commission.
Related Stories
And as the USPS increases its prices, its counterpart north of the border is in the middle of a nationwide work stoppage. Roughly 55,000 Canada Post workers went on strike Friday, halting all mail and parcels from being processed or delivered for the duration of the stoppage. Some post offices will be closed due to the strike, the Canada Post said.
The Canadian Union of Postal Workers (CUPW) is demanding wage increases in line with inflation, cost-of-living adjustment payments to be rolled into the basic wage rate and safe working conditions.
Canada’s postal worker strike followed an agreement between the USPS and 200,000 of its own workers on a new tentative contract, which was reached in October. That deal still needs to be ratified.
Back in the U.S., the USPS hikes come as the agency is still bleeding money to the tune of $6.5 billion in 2024 net losses. But the firm says more than 80 percent of the losses are attributed to fixed costs outside of management’s control, namely $5.4 billion in pension contributions for its retirees and $2.1 billion workers’ compensation claims for employees injured on the job.
The agency’s “controllable” losses decreased $434 million for the year to $1.8 billion from $2.2 billion in the year prior, with an increase in total revenue of 1.7 percent to $79.5 billion.
USPS anticipates to end the 2025 fiscal year with a $6.9 billion net loss and a $1.1 billion controllable loss. So while the agency may be getting its act together on controllable cost cuts, it is again falling short on an initial effort to break even by 2023 as part of the 10-year “Delivering for America” turnaround plan unveiled in 2021.
Already having cautioned in January that it could run out of cash over the next few years, which led the agency to implement $5 billion in cost cuts through the end of 2025, USPS still warned it is in a “still-precarious financial condition” that necessitated the go-forward of the Delivering for America plan.
In an update to the plan called Delivering for America 2.0 released on Sept. 30, USPS said “if we do nothing more, we remain on the path to either a government bailout or the end of this great organization as we know it.” Under the updated plan, USPS is asking Congress to raise its $15 billion borrowing limit with the Treasury Department to keep making infrastructure upgrades.
The agency has taken plenty of heat from citizens and lawmakers alike over the anticipated changes as part of the turnaround, which included a network modernization plan to move mail processing away from local communities into facilities such as regional processing and distribution centers and sorting and delivery centers.
That plan resulted in some delivery delays in some areas where the regional centers were being rolled out, including Atlanta, Houston, Richmond, Va. and Kansas City, Mo.
In the wake of the backlash, the USPS decided to delay the remaining consolidation efforts to Jan. 1, 2025.
As the USPS is seeks to recoup possible losses next year by raising shipping prices, it also plans on raising stamp prices five times through 2027. The agency raised these first-class “Forever” mail costs twice in 2024, most recently to 73 cents in July. There will be no stamp price increase in January 2025, but the hikes will continue next July before returning to their twice-a-year cadence in 2026.
Stamp prices are up 36 percent since early 2019 when they were 50 cents.
While the USPS plans out its 2025 strategy, the Canada Post now deals with the uncertainties of what will happen in its strike next.
The Canadian federal government has already intervened in two separate work stoppages since August, one for the country’s railroads and more recently at ports in British Columbia and Quebec.
Both the Canada Post and the CUPW are returning to the negotiating table on Monday, this time with a special mediator appointed by the government.
The courier says it has offered the union workers an 11.5 percent pay hike over four years, plus additional paid leave and defined-benefit pension protections.
