The US Postal Service (USPS) has released a report on the first year of its 10-year plan to return the organization to financial sustainability while maintaining six-day mail delivery and expanding its seven-day package delivery service.
The 10-year plan, called Delivering for America (DFA), was published March 23, 2021 and is intended to transform the postal service from an organization in financial and operational crisis to one that is self-sustaining and high-performing.
Key milestones in the first year of DFA include the disbursement of US$10bn in funding, postal infrastructure investments, improvements in on-time national service performance, improved service reliability, expanded package delivery, the implementation of a new pricing authority and the Postal Service Reform Act.
The US$10bn in funding came from Coronavirus Aid, Relief, and Economic Security Act (CARES) to offset and reimburse extraordinary costs associated with maintaining service performance during the Covid-19 pandemic in 2020-2021. Over the next 10 years, the postal service plans to invest US$40bn. Approximately US$6.3bn has been committed for investment in core postal infrastructure – covering technology, retail locations, processing equipment, facility buildings and delivery operations. Additionally, the Postal Service recently ordered an initial 50,000 delivery vehicles for US$3bn, including 10,019 battery electric vehicles.
The postal service remains on track to achieve break-even operations for the 10-year period from FY 2021 through FY 2030 and to reverse what had been a projected US$160bn loss for this period. Despite the inflationary impacts on its financial projections, the combined effects of its progress with pricing policies, network transformation, growth initiatives and enactment of Postal Service Reform legislation indicate that the organization should be able to see net profit beginning in the year 2024 and to sustain this financial performance through 2030.
The postal service also reported an improvement in on-time national service performance since the beginning of July 2021. It improved its last-mile delivery performance in precision at the unit, route and delivery point levels. The organization expects this performance to improve over 2022 as it continues to transform operations to achieve a 95% or better on-time performance across all products.
To provide service reliability for customers, USPS has introduced new service standards for its first-class mail and certain periodicals and for first-class package service. To amend these service standards, the postal service sought advisory opinions from the Postal Regulatory Commission. Mail standard changes were implemented on October 1, 2021. These new service standards are intended to enable the design and implementation of a more efficient and reliable network.
Key elements of its package volume growth strategy under the umbrella of USPS Connect have been launched through pilot projects and continue to roll out nationally. This set of offerings aims to broaden network access to next-day delivery capability for businesses of all sizes. USPS Connect was leveraged to support the Biden Administration’s public health initiative to provide free Covid-19 test kits to the public. More than 320 million test kits were rapidly delivered through the USPS Connect destination entry model.
The Postal Regulatory Commission also provided a new pricing framework for market-dominant products to realign pricing policies with organizational needs. The pricing strategies generated US$1.9bn in annualized revenue.
The Postal Service Reform Act was passed with bipartisan support by both the House and Senate and enacted on April 6, 2022 and generates a total plan benefit of US$44.5bn expense reduction. This act included self-help initiatives to provide billions in revenue and cost reductions while improving the predictability and reliability of service. It also includes the implementation of new and existing pricing authorities and legislative changes to retiree health benefit funding rules, including requiring Medicare integration and eliminating the pre-funding requirement.
Louis DeJoy, Postmaster General and CEO, said, “We have made significant progress in the first year of our Delivering for America plan, but our work is far from over. Our employees are playing an integral role in the advancement of the plan. As we continue to implement components of the plan, we expect to significantly improve on-time delivery performance, operational capacity, precision and efficiency, and to do so in a financially sustainable manner over the coming decade. Delivering for America is helping to drive a new sense of purpose and focus across all levels in the organization.”
