During this holiday season, consumers are likely to ask, “Is the United States Postal Service in a better position to serve customers than they were a year ago?”
Even before the pandemic, online shopping and deliveries were an essential staple of the season. Last year, the nation saw 127.8 million shoppers buying via online sites during the Thanksgiving holiday week alone. This uptick in volume presumably represents a significant opportunity for logistics and delivery services to meet consumer demand.
Unfortunately, for the Postal Service, the volume influx has brought about more headaches and hassles than the beleaguered agency can handle. Issues around finances, logistical operations and service standards have created challenges for the Postal Service and customers.
Moreover, from an economic standpoint, there is a concern and much to be learned from the service’s 2021 holiday season results. The agency reported a loss of $1.3 billion during the October 1 to December 31 period. This setback is significant in contrast to the service’s newly stated goals. Last month Postmaster General Louis DeJoy said he aims to make the agency “more formidable than any other delivery entity on the planet.” Those were his words.
USPS’ illustration of global domination sounds ambitious. It is difficult to envision how this is possible when the agency can’t even come close to breaking even, let alone making a profit. It should be alarming that the service has not made a profit in 16 years. Agency leaders have already forecast a loss for the 2023 fiscal year.
The holiday season operations intuitively provide the best opportunity to understand the source of continuing losses. During this period, boatloads of mail and packages flow through the logistics system, and consumers keep returning for more. A large share of this is the monopoly letter mail service, where the service has cornered the market, while significant parts also include the competitive market offerings. The service faces significant risks if revenues cannot cover the high costs of moving such packages and parcels. Greater transparency from this quasi-government agency is desperately needed on a per-product basis.
Fiscal struggles could conceivably be expected if the agency invested in the consumer experience and paid for more infrastructure that improves and optimizes mail delivery. That would be favorable to those who depend on the service. In reality, postal leadership is gutting its networks and leaving everyone dismayed by more frequent delays and extended slowdowns.
The service recently committed to removing 4,000 delivery units nationwide. From the east coast regions around Washington and Philadelphia to the central Plains to Rocky Mountain regions, elected leaders have repudiated the agency’s disregard for increasingly slow delivery duties. Lawmakers also voiced concerns over the lack of transparency with renovation projects that have caused severe disruption for constituents. This lack of quality service is frustrating.
Alongside a strong customer base that propels the service, the agency also has massive resources. In April, the Postal Service benefited from $107 billion in relief via the Postal Service Reform Act. This legislation was said to be the key solution that “restores financial sustainability, avoiding the need for further assistance.” The service capitalized on $10 billion in federal funds for COVID relief and $3 billion more for trucks this year, thanks to the Inflation Reduction Act.
In 2023, postal leaders plan to ask for billions more in Treasury loans and liability relief. Even with all the revenue following in, consumers sadly won’t get a reprieve. In January, letter mail prices will increase for the fourth time in five years.
A well-functioning national delivery system is deeply consequential for keeping communities connected and businesses thriving. We all deserve to know why the Postal Service is robbing taxpayers’ and consumers’ wallets while they fail at their primary job.
