OPINION:
Postmaster General Louis DeJoy participated in his first quarterly earnings call last Friday, and he sought to provide some assurances.
No, the U.S. Postal Service was not holding up mail to thwart plans for mail-in voting, he said. Yes, the Postal Service would be able to handle it if this did occur for the presidential election.
No, he was not there to privatize the Postal Service. And yes, he is there to ensure the Universal Service Obligation – the Postal Service’s promise to deliver to all 165 million American addresses six days a week — is met and Americans’ mail is delivered on time.
But he also was wanted to make clear the earnings he was there to report — a net loss of $2.2 billion for the quarter, which put the Postal Service on pace to lose nearly $8 billion this year — were unacceptable and that change was on the way in what he called “an organizational realignment” of the world’s largest postal service.
Later that day, he demonstrated he is serious, reassigning 23 top executives, including the two top executives in charge of day-to-day operations. He also implemented a management hiring freeze, a request for volunteers for early retirements and a ban on overtime.
Mr. DeJoy also has begun to reorganize daily operations, banning so-called extra trips — when carriers return to their routes to deliver mail that had fallen on the floor or been placed in the wrong box for delivery — and ordering that all trips begin on time, all routes be completed on time and that “the right mail must go on the right truck — every time.”
He wrote in a memo to all employees that it “may be difficult for employees” to see mail left behind, but this mail will be delivered the following day and systems will be improved to decrease the amount of mail that doesn’t leave on time and in the right box. He wrote of “soaring transportation costs” — $200 million for these extra trips alone — and said this was the first of many initiatives to improve the Postal Service’s bottom line.
It was this announcement that brought calls from Capitol Hill to investigate whether Mr. DeJoy is slowing down mail to reduce the chances of mail-in voting being used widely for the 2020 presidential election. Sen. Gary Peters of Michigan, top Democrat on the committee that oversees the Postal Service, has said he will launch an investigation into Mr. DeJoy’s initiatives, saying he’s heard from Postal Service employees, and they say “They are doing things that they never did before.”
Mr. DeJoy plans to look elsewhere for efficiencies as well. The Postal Service reported a decline in revenue from first-class mail of 6.4 percent and a 37 percent decline in revenue from marketing mail. Its package business jumped 53.6% as Americans kept home by the pandemic placed online orders at a Christmas-season pace for five months.
But “the package volume increases drove substantial increases in workhour and operating expenses,” and transportation expenses were nearly $200 million higher this quarter than the same quarter in 2019, Mr. DeJoy said.
He sees ending overtime as a key plank of his pivot to financial viability. Over the last five years, overtime and penalty overtime costs in mail processing have increased by $327 million per year, or 43%, and increases in mail delivery have totaled $576 million or 26%, according to the Postal Service’s inspector general.
Mr. DeJoy, who ran a logistics business, will have much work to do to change a culture that valued buying the business in its competitive lines — sharp discounts in exchange for large volumes — over ensuring its initiatives covered costs.
Mr. DeJoy is said to favor increasing prices for packages – a move that would help address situations such as that in Portland, Maine, where postal staff were found to delay delivery of first-class and priority mail to meet on-time delivery goals for packages. Addressing pervasive inefficiencies that put eCommerce parcels first is an important step to reassuring consumer confidence in core letter mail products.
The Postal Service is also beset by the troubles of $160 billion in unfunded liabilities — about $120 billion of which are in the form of unpaid pension and retiree health benefits — and continuing to kowtow to the unions, as his predecessors did, is not acceptable.
Mr. DeJoy has talked about changing the Postal Service’s business model. That should mean transparently understanding the costs of package delivery and assessing customers accordingly. It should mean streamlining the delivery process by making changes that make it possible for the work to be done accurately and on time. And it must mean standing up to the political forces that will fight change and condemn efforts at reform.
• Brian McNicoll, a freelance writer based in Alexandria, Va., is a former senior writer for The Heritage Foundation and former director of communications for the House Committee on Oversight and Government Reform.
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