Postmaster General David Steiner testified before Congress about the current state of the US Postal Service. (Pool)
The US Postal Service is reportedly planning to charge fuel for package deliveries for the first time in the agency’s history amid rising fuel costs.
I The Wall Street Journal reported that the Postal Service is planning an 8% surcharge starting in April and that the agency plans to phase it out by January 2027, according to two people familiar with the matter.
According to the report, the fuel charge will only apply to packets and will not affect mail.
The move comes as FedEx and UPS have long had their fuel costs raised in recent weeks as oil prices rise due to the war in Iran disrupting the flow of oil from the Middle East.
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The USPS is reportedly planning to implement a temporary 8% fuel surcharge amid rising oil prices. (Andrew Harrer/Bloomberg via Getty Images)
Diesel prices rose to $5.366 a liter as of Wednesday, from $3.749 a month ago, an increase of more than 43 percent over that period.
The Postal Service has faced long-term financial challenges, and Postmaster General David Steiner told Congress earlier this month that the agency was on track to run out of money in less than a year without significant changes.
Steiner testified before a House Oversight subcommittee and told lawmakers that USPS needs higher prices and more borrowing capacity.
He also called for other changes, including changes in the accounting of pension funds and liabilities, workers’ compensation and retirement fund investment strategies.
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The USPS plans for the fuel penalty to be temporary and sunset in early 2027, according to the report. (Joe Raedle/Getty Images)
Steiner also put forward cost-cutting options, including ending delivery six days a week, closing post offices or raising first-class postage stamp rates from 78 cents to $1 or more.
He said if the USPS reduced delivery to five days a week, it would save the agency about $3 billion a year, while closing small post offices in remote areas would save about $840 million.
However, he warned that those options “may not be palatable to Congress or the American public.”
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The six-day-a-week delivery schedule of the USPS is one of the reasons why the agency is facing financial difficulties. (Bess Adler/Bloomberg via Getty Images)
Stamp prices are up 46% since the start of 2019, when they were last 50 cents. Steiner says those prices are still much lower than international postage costs.
The USPS has also reached its current borrowing limit of $15 billion, which prevents the agency from taking on more debt.
“In order to survive beyond next year, we need to increase our borrowing capacity so we don’t run out of money,” Steiner said in prepared testimony. “Failure to do this could lead to the end of the Postal Service as we know it now.”
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As of 2007, the USPS reported a net loss of $118 billion as its most profitable product, first-class mail, fell to its lowest level since the late 1960s.
