Features
April 1, 2024 •
The GCA Desk: The USPS is on the road to failure
Will Congress and the Postal Regulatory Commission take control before it’s too late?
For the last three years, Postmaster General Louis DeJoy has proclaimed himself as the only man with the plan to save the United States Postal Service (USPS). He has vocally criticized his predecessors for failing to come up with such a plan, and boldly defended his Delivering for America. This was quickly implemented after DeJoy’s hiring, against widespread concern from the mailing industry that elements of it would be counterproductive — especially with regard to the intentional loss of more than 40% of mail volume and huge twice-a-year rate hikes. We continue to believe that throwing those customers under the bus was unnecessary, but it was based on gaining massive growth in parcel volumes, which didn’t materialize.
In fact, the FY2023 financial report released in November proves that key aspects of the Delivering for America plan are not being achieved. In what was supposed to be the first break- even year under the plan, the USPS posted a $6.5 billion loss. Parcel volumes were down, and the already pernicious volume losses in traditional mail were far in excess of projections. We believe the reliance on twice-a-year maximum rate increases (which show no signs of abating) is the reason for the volume losses. Moreover, the outlook for FY2024 is not better with the prospect of another $6.3 billion loss next year.
These results will no doubt come as a major disappointment to the leaders of the House and Senate oversight committees who understandably thought they had secured financial stability for the USPS with the Postal Service Reform Act passed in 2022. That bill provided the opportunity for financial stability, but Congress and the Postal Regulatory Commission (PRC) failed to provide critical oversight and accountability for the USPS following the passage of the law. Congress has held only one hearing on the USPS since passing the law, with DeJoy the only witness. The PRC allowed the USPS to continue raising rates at the levels set prior to the passage of the postal reform law to meet retiree healthcare costs that it wiped out. GCA and many other mailer groups warned of the consequences of these actions, but no one listened.
With the USPS’ losses for the year now confirmed, Congress can no longer ignore the problem. Hopefully, the PRC will take a more critical approach to USPS rate requests, but given their record, it is evident that a clearer mandate and structural changes to ensure that monopoly customers have a consistent advocate within the commission are needed.
GCA has led in developing regulatory modernization legislation that we hope Congress will embrace, and that will be part of a more rigorous oversight process to ensure that the USPS is held accountable for the results of the Delivering for America plan. Hopefully, a change in course will be imposed before these problems become unsolvable.
