The Postal Service’s regulator warns the next phase of a 10-year reform plan would slow mail delivery for a “significant portion of the nation,” but wouldn’t save USPS enough money to justify the changes.
The Postal Regulatory Commission, in an advisory opinion on key parts of the USPS “Delivering for America” plan, found upcoming changes meant to cut billions of dollars each year wouldn’t do much to help the agency regain its long-term financial footing — but would lead to “disproportionate” cuts in service across rural communities.
A PRC official told Federal News Network that nearly 40% of single-piece first-class mail — including letters and postcards — would see a service downgrade under these changes — and that the impact would be even greater in rural areas.
“The Commission urges the Postal Service to reconsider whether the speculative, meager gains from this proposal outweigh the certain downgrade in service for a significant portion of the nation,” the PRC wrote Friday.
Postmaster General Louis DeJoy has butted heads with critics of his 10-year reform plan, arguing that nobody else has put forward a strategy to keep USPS from running out of cash. But DeJoy blames the PRC in particular for the Postal Service’s financial predicament.
The commission gave USPS the ability to set mail prices higher than the rate of inflation in December 2020, but DeJoy argues the agency should’ve done this years earlier to minimize the impact of year-over-year declines in mail volume. USPS has seen more than a 30% decrease in first-class mail volume over the past decade, and the commission states “this downward trend is expected to continue.”
“The Commission agrees that changes are needed to ensure the stability of the Postal Service. However, these changes must not come at the expense of the Postal Service’s core mission: providing prompt, reliable, and efficient mail service to all Americans — regardless of where they live,” the PRC wrote.
The regulator’s assessment focuses on two major initiatives: USPS opening massive new mail processing facilities across the country, as part of a historic “network modernization” plan, and the agency running trucks less often between those plants and post offices to transport mail, under a “Regional Transportation Optimization” strategy.
Neither project has gotten off to a strong start. Following bipartisan pushback from Congress, DeJoy agreed to put some network modernization changes on hold, at least until January 2025, after USPS saw persistent declines in on-time mail delivery in the regions where it opened its first regional mail processing mega-centers, called Regional Processing and Distribution Centers (RPDCs).
Meanwhile, the USPS inspector general office reported last month that a pilot of the Regional Transportation Optimization initiative in cities across the U.S. resulted in higher costs, slower mail and increased customer complaints.
The PRC official said these initial efforts suggest USPS won’t be able to achieve its projected cost savings or operational efficiencies as the projects continue to scale up.
“One thing that helps in doing this analysis is we have examples. DFA didn’t just come out last year. It’s been around for a few years. And so, they’ve done some pilot versions of what they’re talking about doing, in this most recent proposal, and we’ve seen the impact,” the PRC official said.
In addition, USPS has told its regulator it plans to no longer count Sundays and federal holidays in tracking its on-time mail delivery metrics. While USPS doesn’t deliver mail on these days, its mail processing operations run every day.
With these changes, the commission expects the delivery window for some single-piece, first-class mail “will extend to 6 or more days.” First-class mail is currently considered on time if it’s delivered within one to five days.
PRC Chairman Michael Kubayanda raised concerns about these changes at a public hearing in December.
“There’s at least a slight discrepancy — at least if someone is just applying common sense … between the number of calendar days and the stated number of days for the Postal Service to meet its expectation, to meet the standard,” Kubayanda said.
USPS estimates that, under a best-case scenario, its initiatives would save up to $3.7 billion annually — approximately 4.5% of its nearly $82 billion in operating expenses last year.
“The projected cost savings will not significantly improve the financial health of the Postal Service,” the PRC wrote.
The commission’s advisory opinion states that USPS’s expectations for scaling up these projects nationwide are “based on conjecture that potentially lead to uncertainty about whether the Postal Service can achieve them,” or even track and measure their success.
“Other than saying ‘trust us,’ the Postal Service offers little convincing evidence or testimony to reasonably support its claims that its proposed actions will turn out the way it estimates,” the commission wrote.
USPS says its network modernization plans are badly needed to revitalize facilities that have gone largely unchanged for decades, and were primarily built to move letters — and not the billions of packages it also delivers each year. USPS also counts on growing its package business as part of its financial recovery plan.
But the Postal Regulatory Commission states USPS is “irreversibly changing its network without laying a foundation for success.”
“The Commission concludes that it is unlikely that the Postal Service will create a more efficient network compared to the legacy network,” its advisory opinion states.
USPS has touted its RTO plan as a “net positive” for its customers — adding that households close to its mail processing hubs would see faster mail service than what they’re already getting.
But in an analysis of affected five-digit to three-digital ZIP codes, the PRC estimates nearly half of all ZIP code “pairs” would see downgraded service for single-piece, first-class mail.
“Periodical and package services would also experience significant downgrades,” the commission wrote.
The commission’s advisory opinion states USPS has made errors on basic steps for implementation, such as not identifying all the post offices that would fall under the initiative.
The commission also warns USPS doesn’t have a plan to achieve a 95% on-time goal for its monopoly mail products. Its service performance score for first-class mail in FY 2024 was 86.5%, down from 91.4% in FY 2023.
USPS told its regulator last November it plans to deliver 87% of two-day first-class mail on time, and 80% of the three-to-five-day first-class mail on time in FY 2025 — down from last year’s goals of 93% and more than 90%, respectively.
USPS reported multi-billion-dollar losses in fiscal 2023 and 2024, falling short of its “break-even” financial goal. The agency saw a $62.7 billion cumulative net loss over the past decade.
The agency, in a “Delivering for America 2.0” update, didn’t include an updated “break-even” timeline. DeJoy told House lawmakers last month the new plan doesn’t include an updated break-even goal, because it requires some actions from Congress and the White House.
“I have a date and time and a projection, but if I say that, that becomes the whole discussion —what we didn’t get accomplished, not what we got accomplished,” DeJoy said.
The PRC official told Federal News Network that USPS hasn’t given the commission an updated break-even timeline.
The post USPS regulator warns latest plans mean ‘certain downgrade’ for rural mail, but ‘meager’ savings first appeared on Federal News Network.