The last year has brought one challenge after another. The pandemic. Civil rights protests. A divisive election. Violent rioters in our nation’s capital.
The impact to the US Postal Service (USPS) was augmented by additional factors. Postmaster General (PMG) Megan Brennan retired and was replaced by Louis DeJoy. In short order, PMG DeJoy was in front of congressional oversight committees defending operational changes, several which were halted after worsened performance.
Mail-in voting surged, doubling in volume. Concerned about potentially delayed ballots, several lawsuits were filed against the USPS. Court-ordered changes included daily reporting on the processing of election mail. PMG DeJoy launched a task force, including the presidents of the postal unions, to reassure the public. The USPS and their workers delivered for the election, with almost all ballots delivered on time to election officials.
The feelings of success were short-lived. Along with the second wave of the pandemic, the “peak shipping season” arrived. Package volumes were so high, both UPS and FedEx limited how many packages they would accept from customers. The additional work shifted to the USPS; an organization already besieged by increased absences due to COVID.
The response to these challenges fell short of the goal. News stories reported trucks lined up for hours waiting to deliver mail to postal facilities. The USPS instituted embargoes at certain sites – prohibiting service providers from dropping off mail. Packages and mail were delayed – in some places for days. In other areas, the delays are being measured in weeks. While volumes have subsided, processing and delivery issues are ongoing.
In the midst of this disarray, the Postal Regulatory Commission (PRC) issued Order No. 5763 – “Order Adopting Final Rules for the System of Regulating Rates and Classes for Market Dominant Products.” Under the new system, the USPS will have additional rate authority when determining postage rates. The factors include a combination of delivery density and retirement-related expenses. The rules went into effect on January 15, 2021 and may be used by the USPS to raise rates above the Consumer Price Index (CPI).
According to a December 31, 2020 filing by the USPS, the additional density rate authority based on the previous fiscal year would be 4.5%. However, there are currently four legal appeals on the PRC order, including one by the USPS. Despite being one of the plaintiffs before the Appeals Court, the USPS doesn’t appear to be waiting to use the new rate authority.
On Sunday, January 24, the annual postage rate increase took effect for Market Dominant and Competitive Products. Two days later, PMG DeJoy spoke before the Mailers Technical Advisory Committee. In a discussion about rates, he said that the USPS lost $10 billion in the previous fiscal year and that losses need to be addressed. When asked when mailers would be informed about the next rate increase, PMG DeJoy responded, “I think it’s imminent.”
Imminent.
The USPS is coming off a month with the worst service performance in recent memory and is still experiencing significant issues. Mailers are struggling in an uncertain economy. Companies are having to reverse late fees and other charges. Insurers are facing regulatory complaints due to delayed mail. Publishers are seeing further erosion of their subscribers.
But the USPS leadership believes that this is the time to announce an additional 4.5% rate increase. That they should charge more for an untrustworthy service in a stumbling economy. This is the equivalent to drilling a hole in the bottom of a leaky boat that is filling up with water.
There are no easy fixes to a problem caused by a combination of institutional issues, a pandemic that impacted employee availability and stressed the system with a massive influx of packages, plus a failure of management. But there are steps that can start to right the course.
- Increased visibility. The USPS has greatly improved their insight into the operations of every facility. Management can see hotspots based on volumes, staffing levels and equipment status. A view into these dashboards need to be made public daily. Knowing where there are issues will allow mailers to adjust what and how they hand off mail to the USPS. This information exists – and should be visible to the public.
- Improved governance. President Biden should immediately nominate three qualified professionals to the Board of Governors. Just as with cabinet members, these appointments should be fast-tracked by the Senate. As noted by APWU president Mark Dimondstein in an interview with NPR, the nominees should also address the lack of diversity of the Board.
- Public accountability. Both houses of Congress should call the entire Board of Governors and PMG DeJoy to testify in public hearings. Instead of generalities, postal leadership should be required to provide details on the service failures that began during peak – and continue today. Each Board member should explain why rates should be raised now – after receiving $10 billion to offset losses due to the pandemic.
- Legislative reform. For over a decade, any attempts at postal reform have died in committee. Now is the time for comprehensive postal reform – defining the universal service obligation, resolving retiree funding issues, and establishing a rate structure that serves the public, industry, and the USPS.
There are many issues challenging the country at this moment. As it has for over 245 years, the USPS has the ability to bind a fractured nation together. It will need structural repairs to continue that mission.
