The Postal Service for years has warned Congress that its business model won’t hold up in the long-term and that “tough decisions” lie ahead when it comes to balancing delivery service with cost.
And with the agency under new leadership, USPS appears to have taken the first step toward making some of those tough decisions.
In an internal memo obtained by Federal News Network, USPS is directing its employees to focus on transportation and cut the “soaring costs” the agency incurs as part of its universal service obligation to deliver mail to every address in the country six days a week.
According to the memo, late and extra delivery trips cost the agency $200 million annually.
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To cut costs, the memo outlines several actions that went into effect last Friday. Late or extra trips to deliver mail, the memo states “are no longer authorized or accepted.” It also directs mail carriers to begin and complete their routes on time.
The memo says that USPS employees may see “mail left behind or mail on the workroom floor” or in processing and distribution centers — a change “that may be difficult for some employees.”
“Any mail left behind must be properly reported, and employees should ensure this action is taken with integrity and accuracy,” the memo states. Should this happen, the memo says USPS will “address root causes” of temporary mail delays and “adjust the very next day.”
“As we adjust to the ongoing pivot, which will have a number of phases, we know that operations will begin to run more efficiently and that delayed mail volumes will soon shrink significantly,” the memo states.
The memo comes a month into Louis DeJoy’s tenure as postmaster general. In a video message to employees in his first week on the job, DeJoy said he would help the Postal Service develop an operating model that will allow it to meet its universal service obligation and put it on a “trajectory for success.”
“We have an expensive and inflexible business model that has largely been imposed on us and that we cannot easily change,” DeJoy said in his video message. “But I did not accept this position in spite of these challenges. I accepted this position because of them, and because I want to work with you in addressing them.”
As the multi-phase pivot takes shape, the memo says USPS expects “operations will begin to run more efficiently and that delayed mail volumes will soon shrink significantly.”
“This operational pivot is long overdue and today, we are talking about the first step in a journey we must take together, for the health and stability of the Postal Service,” the memo states.
American Postal Workers Union President Mark Dimondstein told Federal News Network that the memo points to an effort to reduce overtime costs for postal employees —an issue that’s been on the radar of the USPS inspector general.
But these efforts to cut costs, Dimondstein said, come at a time when the Postal Service has handled a surge in package deliver on-par with what the agency delivers during its peak holiday period at the end of the calendar.
Senior USPS financial officials have told Congress and industry that package volume has generally been 60% higher than pre-pandemic levels, while mail volume has declined 25-to-30%.
While USPS staffs up with temporary hires during the holiday season, Dimondstein said the agency is dealing with staffing shortages from employees who are recovering from COVID-19, in quarantine, or taking leave to care for children or dependent family members.
“What we’ve had in this pandemic is four months of an unforeseen Christmas holiday package period,” Dimondstein said. “So the idea of just saying there will be no overtime is saying to the customers, you aren’t going to get your package. Or it’s saying to the customers you’d better go somewhere else if you want the package. It would be the worst thing to happen to the Postal Service. They can’t slash and cut and burn their way to success.”
Paul Steidler, a senior fellow at the Lexington Institute, said the proposal makes sense given DeJoy’s background as a logistics executive.
The memo, Steidler added, demonstrates the sort of “fresh thinking” the USPS Board of Governors expected when it appointed DeJoy to be the first postmaster general in more than 20 years without prior experience working at the agency.
“The big story here is that the postal unions and some of their supporters want to wage war against the new postmaster general, rather than work to find constructive, holistic postal reforms,” Steidler said.
The recent memo certainly reflects a different business perspective for the Postal Service. In a March 2019 filing to the Postal Regulatory Commission, USPS said the hourly rate for a full-time career employee working overtime “is actually lower than the hourly rate for a full-time career employee working a ‘straight time’ (non-overtime) hour.”
That’s because USPS does not incur additional benefit costs overtime hours. As a result, the Postal Service said it was 6.38% more cost-efficient to have a career employee work an overtime hour instead of onboarding additional career employees and having them work a non-overtime hour.
The Alliance of Nonprofit Mailers also applauded the memo as a “much overdue” effort to reign in postal inefficiencies and unnecessary costs.
Stephen Kearney, the alliance’s president, said USPS won’t be able to provide affordable mail delivery “without major changes to get productivity growing.”
“All private sector non-profits and for-profits must achieve both efficiency and quality service to survive. Otherwise, they will be eaten alive by the competition,” Kearney said. “The Postal Service is supposed to operate in a business-like manner, and it frequently claims to.”
The USPS inspector general and the Government Accountability have frequently reviewed USPS delivery standards and urged the agency and Congress to take a closer look at reframing its universal service obligation to deliver mail to every address in the country six days a week.
Congress has overwhelmingly pushed back on efforts to limit mail delivery to five days a week, and lawmakers have resisted efforts for the Postal Service to cut costs in the fiscal 2021 spending bill.
Meanwhile, a draft budget bill released by House Appropriation Committee lawmakers last week would maintain six-day delivery and prohibit the closure of small, rural post offices.
While factions within Congress have resisted efforts to cut USPS service, Kearney said lawmakers shouldn’t dismiss them outright.
“Immediately identifying initiatives to be more efficient as automatic detriments to service quality amounts to giving up,” he said.
The Washington Post first reported this story Tuesday.