Postmaster General Previews New Reforms as USPS Announces $9B Loss for 2020
As previously promised, DeJoy signals significant changes are coming for the Postal Service.
The embattled top executive of the U.S. Postal Service is promising new and bold reforms of the mailing agency in the months ahead, as he announced a net financial loss of $9.2 billion in fiscal 2020.
With the spotlight of the 2020 election behind him, Postmaster General Louis DeJoy will seek to reinstitute operational and workforce changes that he said are necessary to put USPS on firmer financial footing. DeJoy initially tried to institute sweeping reforms immediately after taking office this summer, but faced significant backlash in the runup to an election with a record-setting number of mailed ballots. His changes were subsequently paused by a series of injunctions in federal court. Those rulings have, so far, primarily impacted postal operations before and in the immediate aftermath of the election, leaving DeJoy an opportunity to renew his efforts to overhaul USPS going forward.
At a board of governors meeting on Friday, DeJoy previewed some of those upcoming changes. Noting USPS has experienced losses for more than a decade, he said postal management would issue a new strategic plan in the coming months. While he vowed to maintain universal service, affordable pricing and six-day mail delivery, DeJoy called himself a “realist” in saying there are “certain realities we need to confront.”
“Clearly, we have an unsustainable business model,” DeJoy said. “Our problems can be solved but we need to get on with the difficult business of solving them now.”
The postmaster general earlier paused an effort already underway before his arrival to reduce the number of blue dropboxes and processing machines after facing severe criticism about the potential impact of the changes on the election. He left his initiative seeking to eliminate late and extra mail transportation trips in place, but courts subsequently ordered USPS to walk it back. USPS will now likely seek to resume those efforts, with DeJoy saying on Friday USPS can “operate with much greater precision.” He also called for investments to enable more innovation, modernize retail and processing operations, better train and equip employees and identify ways to grow revenue.
A recent USPS inspector general report faulted the mailing agency for launching operational changes without first studying or analyzing their impacts, saying the changes exacerbated service performance issues brought on by the novel coronavirus pandemic. Postal management said on Friday it met its window to deliver single-piece First-Class mail in three-to-five days 84.5% of the time in the fourth quarter of fiscal 2020, down from 93% in the same period of fiscal 2019. Postal leaders applauded the work of the agency's employees specifically on election mail, noting they delivered 99.7% of ballots within that window. The IG identified 57 different initiatives USPS started in fiscal 2020 as part of an effort to slash 64 million work hours. Many of the reforms were minor, it said, but combined they led to significant delays after being issued all at once.
Joe Corbett, the USPS chief financial officer, said the agency will again seek to slash work hours in fiscal 2021. The Postal Service’s efforts in recent years to slash its rolls have largely surrounded limiting retail hours, slowing mail delivery and consolidating processing plants. It has also increasingly relied on non-career workers who are not entitled to a full suite of benefits, though DeJoy did promise to “address the instability” those workers face.
“There are a great many things that this board and management team can do to change and improve the Postal Service, and to better serve the public, and we would like to do them,” DeJoy said. He added, however, sufficient reform would only be achieved through legislative and regulatory restructurings of the demands on the Postal Service.
DeJoy also called for financial relief from Congress due to the fallout of COVID-19 and “other economic impacts.” While the novel coronavirus pandemic had an overall negative effect on the Postal Service, it actually helped grow revenue by $2 billion in the fiscal year due to large growth in package business. Packages are more expensive to deliver than regular mail, however, and costs grew by $2.3 billion compared to fiscal 2019. An uptick in paid leave, overtime and hiring due to the pandemic and package delivery needs led to compensation costs growing by $1.2 billion, as well as $630 million growth in transportation costs.
When accounting only for the part of the business that postal management can control, USPS lost $3.8 billion. That marked a 10% uptick from 2019. The overall $9.2 billion loss was about a 5% increase from the previous year.
Absent sweeping reforms, DeJoy and Corbett said, USPS expects to see a loss of about $10 billion in fiscal 2021.