Postmaster General is Delivering Important Postal Fixes
When Postmaster General (PMG) Louis DeJoy took the helm of the United States Postal Service in May, he inherited a dismal situation and an extensive list of problems to solve after years of curious decision-making by management and ongoing failures to correct the agency’s troubling financial and quality performance. Prospects for the Postal Service’s independent sustainability have been deeply damaged, and since 2007, the Postal Service has lost more than $80 billion and has amassed more the $161 billion in liabilities, with net losses escalating to greater depths each of the past three years.
Despite its outsized budget, the arm of the federal government has not lived up to the performance standards that postal consumers have been promised. Each of the past five years, the Postal Service has not met its on-time performance targets for all elements of First-Class Mail, including letters delivered overnight, letters on the two-day timeline, the 3-5 day timeline, and all of the presort letter categories.
In less than four months on the job, PMG DeJoy has already brought intelligent Postal Service repairs — some of which are subject to delay due to over-politicization of the organization and the outgrowth of misinformation from all directions. Now, the PMG has the chance to peacefully restore sanity and set the record straight about his initiatives despite the recent politicized hearings before the U.S. Senate and the House.
For the most recent hot-button issue, PMG DeJoy has made concerted efforts alongside the Postal Service Board of Governors to ensure a sound and secure democratic process as Americans mail in their ballots for November’s election. The establishment of the leadership taskforce on election mail builds off the agency’s previous shortcomings in system-wide alignment and communication and puts the Postal Service on track for proper coordination during this time.
The PMG has also laid the groundwork for demonstrably addressing the progression of package and competitive parcel handlings that has plagued the agency, its consumers, and taxpayers. In recent days, the Postal Service announced a set of parcel rate increases that would come into effect in October, bumping up the commercial prices in the range of $0.24 to $1.50, depending on the package product.
As the Postal Service leadership astutely points out, the move was greatly necessary to mitigate the “increased expenses and heightened demand for online shopping package volume.” Despite a decline in the overall usage rate of the Postal Service in 2020, the organization’s eCommerce focus has driven expenses for salaries, transportation, equipment and benefits up nearly $2 billion compared to last year.
The onslaught of parcels not only hinders the Postal Service’s fiscal imbalance but also inhibits regular mail distribution. At a time when traditional letter delivery has come under such scrutiny in the political world, there is obvious harm to consumers when status quo Postal Service policies entail clear-cut deprioritizing of letters to make way for packages.
Transparency on the flow of Postal Service products remains a qualitative effort that will take time to sort out. But in the meantime, DeJoy has clearly recognized the immediate need to get the accounting figures more in line with reality. Parcels segments are on pace to account for well over half of the Postal Service’s delivery volume, yet as American Consumer Institute has cited, the contribution of competitive services to institutional overhead remains staggeringly low.
The embellishment of concerns around election mail can also be put to rest as a result of the new arrangement for the Postal Service’s short-term finances. The Postal Service currently holds $12.9 billion in unrestricted cash and cash equivalents, which can be applied towards new circumstances in the coming months. Should this reserve fall below $8 billion, the Postal Service leadership has already established a channel for a $10 billion loan if the need arises.
Realistically, however, the costs that are uniquely associated with letter mail delivery have undoubtedly fallen thus far in 2020, given that First-Class Mail volume is down by 1.1 billion items compared to the same timeframe for last year. There simply are not enough registered voters to make up this difference and push the Postal Service to brink.
For the Postal Service’s long-range challenges, it remains anyone’s guess as to why the Postal Service operational expenses have skyrocketed, but it’s a safe bet that new Postal leadership is going to work towards addressing these costs. At the same time, Postal management will have the opportunity to work through substantive changes for the benefit of consumers and millions of people across the country who rely on timely mail delivery.
Steve Pociask is president and CEO of the American Consumer Institute, a nonprofit policy research organization. For more information, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.