UPS Inc. (NYSE:UPS) said it will increase rates by 24 cents on all parcels moving under its SurePost parcel-induction product with the U.S. Postal Service (USPS), effective Oct. 18.
The per-parcel increase matches a 24-cent peak-season holiday surcharge imposed by USPS, the first time the agency has ever levied surcharges during the holiday season. The USPS charges will be levied on large commercial customers like UPS, which under the SurePost program dumps massive volumes deep into the postal infrastructure for last-mile residential deliveries. However, large postal users are expected to pass on the USPS increases in much greater magnitude, thus creating profit centers for that traffic.
UPS’ announcement, which appeared last week as a short announcement on its website, somewhat follows the lead of rival FedEx Corp. (NYSE:FDX), which announced that all shipments tendered through its postal-induction product, called SmartPost, would be subject to a peak-season surcharge. Parcel-delivery experts said then that it was just a matter of time before UPS came to market with price adjustments on its own product.