The mailing agency's liabilities exceed and outpace its assets.
The U.S. Postal Service failed to meet its service performance targets for a majority of its offerings last year, according to a new report, adding yet another setback for the agency as it attempts to right-size its operations to match the shrinking mailing market.
USPS performance actually dipped for most services in fiscal 2015, the Postal Regulatory Commission found in its annual compliance determination, which called on the Postal Service to assess and report back on its failures. While the agency slowed its delivery windows in 2012, it continued to miss its more lax standards for all first class mail delivery -- its most profitable offering.
In all but one category, USPS performance for non-package delivery declined from fiscal 2014. Revenue associated with flat mail continued to fall short of its costs, and those products have lost a total of $8 billion since fiscal 2008. PRC instructed the Postal Service to issue a report within 120 days on the main drivers of “these significant and ongoing service failures and cost issues.”
USPS’ regulatory body also asked for a more comprehensive plan within 90 days to improve service. PRC may institute new requirements for the mailing agency after it reports back.
“The commission will evaluate the report and may use the information provided to form the basis for establishing a new proceeding or other appropriate action,” the regulators wrote.
The Postal Service is also, in many cases, undercharging its customers. PRC identified 24 instances in which USPS gave mailers too large of a workshare discount, to the point that it would have been cheaper for the agency to do the work itself. The report also identified nearly 600 post offices USPS has kept “under suspension,” which generally means the leases on the facilities have expired. PRC said it has repeatedly instructed postal management to remove facilities' suspension status, but the number suspended has instead tripled since fiscal 2012.
Sponsors of a Senate bill to overhaul the Postal Service -- including Sens. Tom Carper, D-Del., Jerry Moran, R-Kan., Claire McCaskill, D-Mo., Roy Blunt, R-Mo., and Susan Collins, R-Maine -- said in a collective statement PRC’s findings should build momentum for their legislation.
“These failures are unacceptable,” the senators said. “The American people deserve fast, affordable, and dependable service. A thriving Postal Service is essential to our economy and it must be repaired. Our bill would begin to do that.”
Many lawmakers and postal stakeholders have criticized the agency for moving too aggressively to consolidate facilities and cut its workforce at the expense of prompt delivery. After closing 141 facilities beginning in 2012, USPS postponed indefinitely its plan to shutter 82 more in 2015 to ensure “prompt, reliable and predictable service.”
Postal management told its regulators it implemented a change in its operating window at mail processing plants across the country to prepare for the new consolidations, which “had a much greater impact on service than was anticipated.” While PRC said the performance shortfalls have been prevalent for years, USPS maintained the cause of last year’s issues was a “one-time vent that is not likely to be replicated.”
USPS also said it has instituted comprehensive service improvement plans ”focusing on critical sites” and taken additional steps to expand its delivery capacity.
“Providing excellent service is foundational to the U.S. Postal Service and is key to our growth and success,” said Dave Partenheimer, an agency spokesman. “We have employed numerous efforts to stabilize our network and improve service throughout the country, including implementing solutions based on thorough analysis of key performance data.”
The bad news for the Postal Service did not stop just with its poor performance. A second PRC report released this week found USPS’ liabilities outweigh its revenues, and that situation is also only getting worse.
The agency’s $50.4 billion in liabilities is outpacing the value of its aging collection of equipment, vehicles and facilities, which declined $652 million last year. While USPS was operationally profitable -- after removing uncontrollable costs such as its retiree health benefit prefunding -- each of the last two years, its problems will only be exacerbated April 10 when it will start charging mail users significantly less for its services.
On that date, USPS’ emergency price surcharge in place since 2014 is set to expire, absent congressional intervention. The surcharge accounted for $2.1 billion in revenue in fiscal 2015, PRC said.
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