USPS Has a Plan: Investments, Cost Reductions, ‘Other Strategies’

A politician quipped, “There’s no DeJoy in the Post Office tonight,” after Postmaster General Louis DeJoy announced his 10-year plan to revive (rescue?) the US Postal Service on Tuesday. The US Postal Service also announced the formation of a task force on service performance at specific locations within the postal network.

The 10-year plan, called Delivering for America, will help put the organization on a path to financial sustainability, according to General DeJoy.

Some of the key changes that news headlines are keying in on are slower mail, higher rates, and cuts to post office hours. But the USPS said the plan would put the organization on a strong financial footing, describing the “Total Plan Benefit” as follows:

• $58 billion: Legislative and administrative action: Includes Medicare integration and eliminating the pre-funding requirement;
• $44 billion: Regulatory changes via Postal Regulatory Commission: Includes pricing flexibility for market dominant products;
• $34 billion: Self-help management initiatives: cost improvement: Includes mail processing, transportation, retail, delivery, and administrative efficiency.
• $24 billion: Self-help management initiatives: revenue improvement: Includes package growth, new competitive products and pricing changes and revenue from package volume and price increases.

The last bullet point means higher rates for packages, hitting online sellers directly in the pocketbook.

But the second bullet points also cites higher prices – by loosening restrictions on how much the Postal Service can raise rates for mail (market dominant products). That was an issue raised last year – see this November 30th article in Government Executive for details.

It’s interesting to hear what the Postal Service sees as key challenges. In a “plan at a glance” document (PDF), it states:

The Problems We’re Addressing through the Implementation of This Plan:

• Hastened shift in demand away from mail to packages
• Misaligned mail and package processing operations
• Underperforming air and surface transportation network
• Unattainable First-Class Mail service standards
• Prolonged underinvestment in retail and delivery network
• Misaligned and redundant organizational design
• High turnover rate within our noncareer employee workforce
• Long-overdue pricing regulation changes from the PRC
• Onerous legislative and administrative mandates

The American Postal Workers Union (APWU) issued a press release saying there were elements of the plan it would support and elements of the plan it would oppose.

Of special concern to the APWU is the slowdown of mail and reduction of services at a time when it says the public is demanding faster delivery of mail and packages. It said proposals that would slow the mail and reduce retail services, including reducing operating hours at post offices, would have a negative effect on postal workers and the public.

While some lawmakers have similar concerns, according to the Washington Post, the newspaper explained which areas Congress controls and which it does not. For example, “The postmaster general unilaterally controls operating hours at post offices, and the board of governors appears to back DeJoy’s changes to delivery times,” the Post explained.

The mail slow-down is getting a lot of attention, but according to the Delivering for America plan, “The First-Class Mail 3-day service standard requires a complex and high cost transportation network to cover vast geographic areas.”

It notes that the Postal Service does not own planes and is forced to rely on third parties for air transport.

“The scarcity of airplane and truck capacity, and the industry competition for both of those transportation modes, impacted our ability to deliver throughout 2020 and especially during the peak holiday season.”

It goes on to say, “Increased package volume, a dispersed processing network causing products to travel excess mileage, and an extremely distributed collection process to pick up increasingly smaller mail volume make it impossible to meet our current service standards, or do so at a reasonable cost.”

While many see the mail slow-down as problematic, one thing generally seen as a positive in the plan: the intention to preserve six-day mail and expand seven-day package delivery.

The full plan in PDF format on this page of the USPS website contains details and the rationale for changes.

And here’s how the Postmaster General and other postal executives sold the plan to postal employees in a video.

You can weigh in with your thoughts on the plan below and on the EcommerceBytes Blog, “Uh-oh: USPS Rate Changes Ahead.”

Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.