Any and all shippers in the United States know that the US Postal Service is in financial trouble. Since 2007, USPS has posted billions of dollars in losses. In 2016, the organization even came under the scrutiny of President Trump, when he ordered the Postal Task Force to investigate why USPS was so severely unprofitable. In 2019, postal leaders met with Congress and claimed they would deliver a plan that outlined how to save USPS by the summer. However, summer came and went, and no plan was presented. Now, the time has finally come. After much anticipation, USPS has released its five-year turnaround plan, courtesy of Postmaster General Brennan and the USPS Board of Governors.
What USPS’ Five-Year Turnaround Plan Entails
The five-year turnaround plan that USPS just released focuses on five key goals that will place the organization on healthier financial footing. These five points are:
- Deliver world-class services and customer experiences
- Equip, connect, engage, and empower employees to serve their customers
- Innovate faster to deliver value
- Invest in future platforms
- Pursue legislative and regulatory changes necessary to achieve financial sustainability
A Big Pivot: Focusing More on Digital Services and Expanding Away from Post Offices
The most interesting point we found in the published plan was USPS’ desire to overhaul its customer experience. For example, the plan looks beyond offering services at the Postal Service’s 26,000-plus physical post office locations, and looks at providing digital services “that enhance the value of our physical delivery services.” Such digital services would include “flexible and frictionless” package returns from every home, and expanding parcel delivery from 6 days to 7 days a week.
Currently, USPS doesn’t deliver parcels on Sundays, while other private carriers such as UPS and FedEx do. Adding this extra parcel delivery day to USPS’ schedule would ensure that retailers such as Amazon would always be able to guarantee 2-day shipping through USPS’ last mile delivery network. In addition, the yearly revenue generated from delivering parcels one extra day every single week would put a lot of extra operating income in the Postal Service’s pocket. Parcel delivery is, after all, the largest growing source of revenue for the USPS. Since USPS is crucial to the success of small to mid-sized eCommerce businesses, it only makes sense to focus more on parcel delivery as eCommerce continues to grow year over year.
Repealing Pre-funding Legislation is Still the Most Critical Step to Take
While these aforementioned strategies are all well and good, repealing the pre-funding legislation is the most critical move to set USPS back on stable financial footing. This legislation enacted by Congress in 2006 requires USPS to set aside massive amounts of revenue in order to pre-fund future employees’ health care and retirement benefits. In fact, the pre-funding mandate is the biggest reason why USPS has incurred losses in the billions of dollars since 2007. According to Postmaster Brennan, USPS faces a $125 billion shortfall over the next 10 years if this legislation isn’t repealed. Thus, it came as no surprise to see that repealing the pre-funding legislation was one of the plan’s most critical areas of focus.
Where Do We Go From Here?
At this point, USPS has presented all the evidence and the statistics. However, USPS leaders can’t just change pre-funding laws themselves. Congress is the sole governing body that holds all the power to repeal the pre-funding legislation. Now that Postmaster General Brennan and the Board of Governors have released this five-year turnaround plan to steer USPS back to profitability, it’s up to Congress to take action.
“Our mission and our role in America’s economy and society remain indispensable — but we can only continue to compete effectively and meet the high expectations of the public with an improved business model,” the plan states. “Ultimately, Congress determines the contours of the Postal Service’s statutory business model and therefore has the unique authority to enable this vision or direct the Postal Service toward a different vision.”
For what it’s worth, we hope that Congress does repeal this legislation sooner rather than later. America needs a healthy Postal Service, and as eCommerce only continues to grow and connect the world, USPS will only continue to play a larger role in the entire global economy, as well.
If you’d like to read USPS’ whole five-year strategic plan, you can find it on USPS’ website.