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By Tom Sanders
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Facing mounting financial pressures, the U.S. Postal Service (USPS) announced plans Thursday to raise shipping rates early next year, just days after reporting a $6.5 billion fiscal loss.
The Board of Governors approved changes this week that will increase domestic shipping prices for Priority Mail, Priority Mail Express, USPS Ground Advantage, and Parcel Select by an average of 5.9 percent. The changes go into effect on January 17, 2027.
International rates—including Priority Mail Express International, Priority Mail International, First-Class Package International Service, and International Priority Airmail—will climb by approximately 7.9%. First-class mail rates and stamp prices will remain unchanged.
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USPS Warns of Major Changes to Post Offices and Mail Delivery
Fuel Surcharges Made Permanent
In addition to the baseline rate hikes, the USPS announced that an 8 percent transportation-related surcharge introduced in April will become a permanent fuel surcharge. Coupled with an additional 3 percent increase due to higher fuel costs, the total surcharge will rise to 11 percent.
The surcharge does not currently affect international products and will be reevaluated in July 2027 based on fuel price trends throughout the first half of the year.
Deepening Financial Deficit
The rate adjustments follow a fiscal statement released Tuesday detailing the agency's $6.5 billion loss in fiscal year 2026. Although the deficit is an improvement over the previous year's $9 billion loss, Postmaster General David Steiner acknowledged that the persistent financial drain has left the agency in critical condition.
“We will need to make drastic changes in the number of post offices and marketing mail service levels,” Steiner said in a statement. “And we will need to look at other areas to generate the cash we need to meet our obligations to our employees and to the American public.”
Steiner previously appealed to lawmakers for additional funding in March, warning the U.S. House of Representatives that the agency could run out of funds within months unless action is taken.
“The bottom line is that we are out of cash," he said at the time. "We are borrowing from our employees’ retirement funds to continue operations. The Postal Service has a broken business model and action is needed by Congress to fix it."
During a House appearance in August, Steiner warned that postal deliveries could halt altogether in 2027 if funding goals were unmet, describing April’s emergency fuel surcharge amid the U.S.-Iran war as a last-resort cash-raising measure. Following that surcharge and a recent agreement with DHL eCommerce for last-mile parcel delivery services, the agency is now projected to remain operational until at least 2031.
USPS has been reporting net losses of around $120 billion since 2007, after its biggest money-maker, first-class mail, saw a sharp decrease in usage following the shift to digital communications.
The Postal Service delivers to 170 million addresses six days a week, costing the agency $3.4 billion a year, Steiner said. Seventy percent of routes lose money, and around 58 percent of its 18,000 post offices are also unprofitable.
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Transformation Plan and Legislative Response
President Donald Trump has previously floated the idea of either privatizing the Postal Service or merging it with the Department of Commerce. However, the move has been strongly opposed by workers, with a survey by the American Postal Workers Union showing those surveyed rejecting privatization by a margin of 34 percent.
“Plans to privatize the Post Office are about enriching Wall Street and not serving Main Street,” APWU President Mark Dimondstein said. “Evidence shows that selling off the USPS would lead to higher prices for postal services as well as higher prices for shipping packages at FedEx and UPS.”
Meanwhile, postal officials described the price increases as part of an "ongoing transformation plan" designed to preserve the agency's public service mandate of providing a nationwide network for mail and package delivery at least six days a week. The proposed adjustments remain subject to review by the Postal Regulatory Commission.
In response to the agency's financial restructuring and potential facility impacts, Democratic Representative Brendan Boyle of Pennsylvania introduced a bill in Congress this week. The legislation would require the USPS to "notify postal customers and certain officials if a post office in a leased facility is at risk of closure and seek to relocate such post office to a new facility within the same ZIP code, and for other purposes."
Boyle, an outspoken supporter of postal workers rights, has previously called on Congress to supply USPS with additional funding and has stood with local postal unions to protest cuts and closures to the service. He signalled his intent to submit the bill back in June, writing on X: "Families count on their local post office. I stood with local leaders to demand that USPS protect access for residents affected by the closure of the Fishtown post office. I'll be introducing a bill requiring USPS to work to find replacement locations before closing offices."
What Happens Next
The USPS will now look to the new Democrat-controlled Congress for next steps when the party assumes their seats in January.
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