U.S. Postal Service boss Louis DeJoy has unveiled his 10-year plan to overhaul the money-losing agency with changes that he says will allow the service to operate at a financial break-even rate by 2023 by focusing its efforts on expanded parcel delivery rates and services for business customers.
Under the plan, the USPS will launch a “USPS Connect” product to serve business customers by expanding its core package products—Priority Mail, Priority Mail Express, First-Class Package Service, and Parcel Select—to offer same day, next day, and 2-3 day delivery options six to seven days a week. DeJoy said USPS will submit a number of filings with the Postal Regulatory Commission in the coming weeks regarding pricing, products and services, and infrastructure.
Those changes would be in line with a jump in e-commerce volumes over the past year during the pandemic, which has also prompted USPS to name the military contractor Oshkosh Defense last month for a $482 million contract to build a new generation of postal delivery vehicles with increased cargo capacity.
While that move tracks with recent business conditions—USPS recently reported its first fiscal year generating more revenue from package delivery than first class mail—the agency also came in for criticism when DeJoy said that only a small portion of those new vehicles would use zero-emission, battery-powered vehicles as opposed to internal combustion engines.
During his nine months in the corner office, DeJoy has also made—and then paused—cost-cutting measures that slowed the delivery of many letters and parcels in the months before the surge of letters generated by mail-in ballots during the Presidential election and by the winter peak holiday season.
The postmaster general addressed both of those issues in the 10-year plan announced today, saying that while the first of the new Oshkosh Defense vehicles are expected to appear on carrier routes beginning in 2023, the entire delivery fleet could be electric by 2035, “with Congressional support,” a phrase that implies he intends to request additional funds for the change.
DeJoy said he also plans to ask Congress to repeal the USPS’ retiree health benefit pre-funding mandate, and to maximize future retiree participation in Medicare. That mandate has shackled the service’s ability to balance its budget in recent years by requiring it to pay for employee benefits up-front instead of through a tax on current workers’ wages, similar to how the federal Social Security system operates.
The new plan also called for USPS to increase its income, saying the service would generate $24 billion in net revenue in part from its “USPS Connect” plan, featuring “enhanced package delivery services for business customers, including same-day, one-day and two-day delivery offerings.” According to USPS, that approach would preserve affordable, six-day mail and expand seven-day package delivery.
“The need for the U.S. Postal Service to transform to meet the needs of our customers is long overdue,” DeJoy said in a release. “Our Plan calls for growth and investments, as well as targeted cost reductions and other strategies that will enable us to operate in a precise and efficient manner to meet future challenges, as we put the Postal Service on a path for financial sustainability and service excellence.”
“The Postal Service’s problems are serious but, working together, they can be solved,” DeJoy said. “Our 10-year Plan capitalizes on our natural strengths and addresses our serious weaknesses. It ensures that we can better meet the nation’s evolving delivery needs, and do so with the higher degree of efficiency, precision, and reliability that our business and residential customers expect and deserve. It can and must be done.”
Despite its ambitious tone, the plan also recognized the political challenges DeJoy may face in applying those changes. In addition to its reliance on Congress to change its health and pension funding mechanisms and to pay for additional electric vehicles, the plan may also face scrutiny from a slate of new governors nominated by the Biden administration. If confirmed by Congress, those three nominees would change the majority on the USPS board of governors from a Republican to a Democratic majority.
The USPS’ current chairman of the board, Ron Bloom, referenced that tricky territory in a release. “The Plan will achieve service excellence, adapt the Postal Service to the evolving needs of the American people and address our obligation for financial sustainability. Through a wide-ranging process involving numerous talented and dedicated public servants throughout the organization and insightful input from many stakeholders, they have done just that,” Bloom said in a statement. “This Plan will revitalize this American treasure and we are excited to work with our union leaders, stakeholders and newly nominated Governors, once they are confirmed, as we move it forward.”
