USPS says it will make its postage fuel surcharge permanent in 2027 as diesel prices soar

The cash-strapped United States Postal Service announced on Thursday that it is seeking approval for an 11% price hike for domestic priority mail and package deliveries in January to deal with rising fuel costs, according to CNBC. Bloomberg.com reported that the U.S. Postal Service is moving to raise and make permanent its fuel surcharge, which the agency introduced for the first time earlier this year. The fuel surcharge is rising from a temporary 8% surcharge that was imposed in April. According to CNBC, USPS said this week its transportation expenses in the 12 months ending September 30 rose by $225 million due to higher fuel costs. Bloomberg.com noted that the fuel surcharge hike comes after diesel prices hit record highs due to the war in Iran. The USPS implemented its first-ever fuel-related fee in April, soon after the war started and diesel prices jumped, and costs have continued to increase throughout the year.

CNBC reported that USPS said it was proposing to hike overall domestic shipping services prices 5.9% on average and is raising prices by an average of 7.9% for international deliveries. Bloomberg.com reported that that adjustment is in line with the typical annual rate changes that other large parcel carriers have announced for the year ahead. Shares of parcel giants United Parcel Service Inc. fell 1% and FedEx Corp. slipped less than 1% on Thursday after the Postal Service announced the planned price hikes, according to Bloomberg.com. CNBC reported that USPS needs approval from the Postal Regulatory Commission for the price increase, and said it was not planning to hike the price of first-class stamps in January, which rose in July from 78 to 82 cents.

The announcement comes days after the USPS reported annual financial results which showed that the agency lost $6.5 billion in fiscal year 2026, compared with $9 billion the year prior, as reported by Bloomberg.com and CNBC. According to CNBC, USPS asked Congress on Tuesday for $2 billion in support and reimbursements as its head warned the agency would be forced to make significant cuts in retail post offices and other reductions unless lawmakers act. Bloomberg.com reported that Postmaster General David Steiner has said the agency could run out of money as soon as February, and has halted discretionary spending and certain retirement contributions to stave off a liquidity crisis. CNBC reported that the volume of first-class mail, its most profitable product, fell this year to its lowest level since 1965 as consumers have moved to digital communication, while USPS must still pay for costly nationwide delivery. According to CNBC, the agency has recorded net losses of more than $120 billion since 2007, and Postmaster General David Steiner says the agency has a broken business model and needs help from lawmakers to turn around its operations. CNBC also reported that the new Democratic-led Congress, which takes office in January, will need to decide whether to help the Postal Service after Republicans held a series of hearings over the last two years on its finances.