USPS: More Cuts, More Costs
Last updated 9/9/2024 at 10:15am
More changes are coming to the U.S. Postal Service, as they are considering cutting costs from their operations, in hopes of getting into better financial shape. To do that, the postal agency wants to overhaul its delivery logistics, resulting in some customers likely seeing a slowdown in their mail delivery.
If the proposed changes are implemented, which wouldn’t happen until after the November election, customers within 50 miles of the Postal Service’s largest processing facilities would get faster delivery service. Those customers account for most of the mail and packages.
Election mail and holiday shipments won’t be affected because the proposed changes would not take place until the next calendar year, officials said. Medications also should continue to be delivered at their current speed, or faster, under the proposal.
The new plan, which will be filed with the USPS’ regulatory commission, comes about three years after the mail service embarked on a 10-year plan to stanch billions of dollars in losses and put the agency on the path to profitability. The plan, implemented by Postmaster Louis DeJoy, also slowed delivery standards, with the service guaranteeing five-day delivery instead of its previous three-day delivery window.
The proposed changes will cut about $3 billion a year, the USPS said. But, added, “Depending on location, time and distance, expected time to deliver will increase for some ZIP code pairs.” This proposal also aligns with the organization’s mandate to be financially self-sufficient while continuing to deliver to every address across the nation six days a week.
The USPS has also increased the price of Forever stamps several times within the past few years. The latest change took place on July 14, with a five-cent increase in the price of a first-class mail forever stamp from 68 cents to 73 cents. The adjustments, approved by the governors of the Postal Service, raised mailing services product prices approximately 7.8 percent.
With the proposed changes, the slower service could be felt by rural areas and for mail that needs to travel long distances. Also under the changes, all mail would still be delivered in its service standard of delivery within two to five days. The majority of mail from rural areas is currently delivered in three days or less, which would continue to be the case.
Mail delivery from some rural areas, however, may take an additional 12 to 24 hours, but would still arrive within a range of two to five days. In some cases, a piece of mail that might have taken three days to arrive could take four days instead, for example.
Postal customers who live closer to regional hubs will see the greatest reductions in transit time for mail; transit times for some rural customers could grow while still falling within existing service standards, an official said.
A USPS fact sheet about the proposed changes notes that the plan would have no impact on 75% of first-class mail.
The combination of higher prices and slower delivery raises the risk that the USPS will lose more customers, critics say. That would come at a time when the postal service has already seen a sharp drop in first-class mail volume, which has slipped to 28% to 46 billion pieces in 2023 from almost 64 billion pieces in 2014, according to USPS data.
The Postal Service has amassed more than $87 billion in losses from 2007 through 2020.
However, the USPS’ revenues haven’t covered its expenses and debt for more than 15 years, according to the Government Accountability Office (GAO). Its expenses are outpacing revenues as it sees a continuing decline in volume of its most profitable product, First-Class Mail, according to the GAO. To cover its costs, the USPS has been increasing its debt and unfunded liabilities.
The changes align “with the organization’s mandate to be financially self-sufficient,” the USPS said in a statement. This means the agency should be able to cover its expenses through the sale of its products and services.
The proposal reflects the Postal Service’s move to overhaul its processing and transportation network with an emphasis on regional hubs, something that is already beginning to take place in Portland, as well as Atlanta and Richmond, Virginia. Changes to better utilize existing ground networks mean the Postal Service must adjust pickup and drop-off times between post offices and processing plants, a process that will increase the speed of some of the mail, officials said.
Also, on September 5,, the USPS filed notice with the Postal Regulatory Commission (PRC) regarding a temporary price change for some package services for the 2024 peak holiday season. This temporary price adjustment is to help cover extra handling costs to ensure a successful peak season.