The U.S. Postal Service is consistently favored by an overwhelming majority of Americans, but it has come under fire in recent months over its ability to remain solid during the COVID-19 pandemic and handling election mail in November.
Concerns about the election have been fueled by remarks made by President Donald Trump, who is threatening to withhold funding from the Independent Bureau because it would expand post-vote.
In addition, the recent efforts of Postmaster General Louis DeJoy to initiate austerity measures for the end of the USPS fiscal year on September 30 have been reversed by Congress, as he is a key donor to Trump appointed by a USPS board of directors with strong ties to Trump and the Republican Party.
Amid growing security concerns, there are major concerns about USPS’s financial prospects that have plagued it for years. These include threats from competitors and customers such as Amazon, UPS and FedEx, billions of dollars in debt, costly retirement and health benefits and the shift to digital communications and marketing.
Although it is clear that the Post Office needs financial relief, several experts said that it was not really in order due to the elections.
Even USPS itself, which initially expected the money to run out by the end of September, adjusted its forecast to March to October 2021, thanks to the rise of pandemic-related shipping, which enabled it has the pandemic better than expected.
Plus, it currently has more than $ 14 billion in cash and a $ 10 billion credit line under the CARES Act. It is also possible that Trump, who has sent mixed messages about USPS funding, will agree to provide an additional $ 25 billion in cash.
While USPS is a government agency with federal employees, it does not receive any money for taxpayers and instead depends on commercial activities such as selling portage, products and services to self-funds.
Today’s resources are more than enough to enable him to deliver ballot papers and handle any election-related post, according to Kevin Kosar, an executor at the R Street Institute think tank that has been covering postal issues for more than 10 years. for the Congressional Research Service.
“Trump has confused a lot of people by confronting the post office situation with postal voting. “Trump said the post office somehow needs $ 25 billion to handle all these votes, and that is not good,” Kosar said. “The people who need money for voting by mail are state and local election administrators whose budgets do not anticipate this level of demand.”
Kosar said he was concerned that the $ 25 billion fee currently being considered by Congress is problematic because it comes down to a low level of control that the Postal Service will not really help.
“It does not do things to better control costs, it does not give it extra authority over pricing, what are things you need if you want to balance your books,” Kosar said. “In principle, it prohibits the Post Office from continuing with what it has been doing for years – reducing the number of post offices, blue receivers, mail processing machines – in an effort to curb their growing costs. The bill says in principle stop doing, which is not good for the Postal Service. ”
Kosar, acknowledging that the Postal Service has major problems, says that Congress should instead try to implement real changes that will help the Postal Service succeed in the 21st century.
Congress currently requires the Postal Service to deliver paper mail six days a week, even if demand falls, resistance to the closure of underused post offices and sorting facilities, generally prohibits USPS from raising prices above the inflation rate and requires it to use a largely uneducated workforce. All amount to high costs, according to Kosar.
The Postal Service has lost more than $ 78 billion in recent years, including $ 8.8 billion in 2019. It also has more than $ 150 billion in outstanding liabilities and debt – more than double its revenue of $ 71.1 billion in 2019 .
Part of the Post Office’s problems are related to the Post Office’s Post Responsibility and Increase Act 2006, which required it to fund its pension health benefits.
But it also hits a marketplace where changes in digital advertising and communications have led to a decline in first-class mail, typically the largest source of revenue.
USPS has been steadily increasing its press delivery service in recent years and is now almost on par with its first class post in terms of business revenue. However, despite increases in package delivery, first class and marketing post the vast majority of USPS activity remains out in terms of volume.
While the Postal Service has a virtual monopoly over first-class mail delivery, it has to contend with stiff competition in the delivery of parcels from commercial entities such as UPS, FedEx and Amazon. These companies are competitors, but also serve roles as customers and key partners for the Postal Service.
“There are partnerships and there is uncomfortable competition between them. They are frenemies, ”said Kosar.
All three companies depend on the Postal Service’s commitment to provide ‘universal service’. They rely on their large and established national delivery network for their “last mile” deliveries to rural and remote areas, where their own resources are limited.
But they also compete for delivery services. The Postal Service’s revenue of $ 71.1 billion in 2019 is comparable to its two main competitors: UPS had $ 74.1 billion in annual revenue and FedEx had $ 69.7 billion.
Amazon, which helped boost the Postal Service’s excitement in parcel delivery, also poses a major threat as it builds its own logistics network with a delivery fleet and lockboxes.
USPS acknowledged this in its 2019 annual report, saying that the increase in service volumes over the past five years is largely due to significant volume growth of three key customers, all of whom are building the delivery capacity by which they can tune the postal service. ”
If that volume is diverted, the Postal Service warns that growth in this area may not continue.
USPS also requires these companies to help with their own supplies, namely air transportation, because it no longer owns or operates aircraft, said Mark Jamison, a retired postmaster who serves as a consultant for the Save the Post Office website.
“Both UPS and FedEx are two of the largest suppliers that the Postal Service pays for. FedEx flies most of its priority position, ”Jamison said. “FedEx and UPS have huge contracts with the Postal Service for services they provide. The Post Office pays them enormous amounts of money. ”
The 2019 annual USPS report notes that “a significant limitation in the air transportation service could adversely affect our business and results of operations”, as could negotiations on terms of service with these companies.
“The Postal Service is also dependent on these other companies,” Jamison said. “You have all these early relationships and post reform is really needed to address all of that.”
