The Postal Service is drafting an “ambitious plan” for the agency to cut costs out of its delivery network after November’s election, Postmaster General Louis DeJoy told lawmakers on Friday.
In addition, DeJoy told members of the Senate Homeland Security and Governmental Affairs that USPS would seek “more pricing freedom” from Congress, as well as legislation that would reform the agency’s mandate to pre-fund retiree health benefits.
The Postal Service, he added, also supports congressional efforts to give the agency emergency funding that would help reimburse USPS for costs incurred during the coronavirus pandemic. USPS is on-track to report a $9 billion loss this fiscal year.
“This organization continued to perform — and it’s why we’ve had such high ratings — while our revenues were down. Other organizations would have stopped going into some of these rural areas,” DeJoy said.
The House will vote Saturday on a bill that would give the Postal Service $25 billion for operational costs, despite pushback from the Trump administration.
But with “no help in sight” from lawmakers to address the Postal Service’s long-term financial problems, DeJoy said the Postal Service will continue to look at ways to cut costs from its delivery network.
“It is really a farce to believe that we can sit here and do nothing,” DeJoy said.
He also urged the Postal Regulatory Commission to ease up on strict price caps on mail products that USPS has a monopoly on. The PRC ruled three years ago that the current rate-setting system doesn’t meet standards to keep the USPS financially healthy, but has yet to provide an alternative pricing system.
DeJoy said the obvious choice for the Postal Service to cut costs was to reduce late and extra delivery trips from mail processing facilities to local post offices. DeJoy said the Postal Service oversees 40,000 trips a day and that 12% of those trips were late, costing the agency up to $4 billion annually.
“FedEx, UPS — everybody runs their trucks on time. That’s what glues the whole network together, our collection process to our delivery process. That was not my schedule,” he said.
DeJoy told senators that keeping these deliveries on-time would save $2-3 billion a year, and would also lead to more on-time deliveries. However, the Postal Service’s own data shared with its business customers has shown a sharp decline in on-time delivery.
“Unfortunately, our production processing within the plants was not fully aligned with this established schedule. We had some delays in the mail, and our recovery process should have been a few days and it’s amounted to be a few weeks,” DeJoy said.
However, DeJoy said the Postal Service will continue to allow overtime where needed, and that the agency has spent $700 million on overtime costs since he took office in June.
Unlike some of his predecessors, DeJoy said he doesn’t support changing the agency’s mandate to deliver mail to every U.S. address six days a week.
“I think the six-day delivery, the connection that the postal letter carrier has with the American people, that gives us this highly trusted brand. And where the economy is going in the future, I think that is probably our biggest strength to capitalize on,” DeJoy said.
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August 21, 2020 at 11:40PM
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