New five-year study paints grim picture for USPS

Washington Postal Scene by Bill McAllister

The United States Postal Service faces a grim future, according to a new five-year strategic plan that it published Jan. 15.

Titled “Ready-Now Future-Ready,” the much-anticipated study for fiscal years 2020 to 2024 said the USPS is saddled with an “unsustainable” business plan and continued projections of declining mail volume.

“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,” said an opening letter from Postmaster General Megan Brennan and Robert Duncan, chairman of the Postal Service’s board of governors.

The report is designed to give Congress a hard look ahead on the Postal Service’s future, something legislative leaders have demanded from the agency.

The study warned that demands for 6.9 million new delivery points will continue to hit the USPS by 2024 as it projects a decline in overall mail volume of 18 percent in the same five-year period.

According to the study, this drop in mail volume will lead to a decline in revenue per delivery point of 4 percent.

Mailpieces per delivery point will drop to 2.6 pieces a day by 2024, the study said. That number was 3.8 pieces a day in 2014 and 3.3 pieces a day in 2019, according to the study.

“Although our baseline forecast shows continued decreases in the demand for mail delivery services, there will still be significant demand and the expectation that all United States residents will retain the ability to send and receive mail delivery services from their homes and businesses,” the study said.

The report does suggest that “there is an opportunity to reposition the value of mail with businesses, retailers and marketers” by getting them to better integrate their mailings with other digital marketing campaigns.

Also, it acknowledges that the Postal Service faces serious economic challenges.

“We have suffered 13 years of consecutive net losses, totaling $77.8 billion,” the study said.

“Our financial challenges reflect the simple dynamic that our largely fixed and mandated costs continue to rise at a faster rate than the revenues we are able to generate in the competitive marketplace.”

The study blamed the price cap that limits stamp price increases to no more than the rate of inflation, Congressionally mandated employee benefits, and the six-day (Monday through Saturday) mail delivery plan for largely creating those annual losses.

“Without more flexibility to respond to the changing market in an economically rational way, we expect to run out of liquidity by 2021 if we pay all our financial obligations — and by 2024 even if we continue to default on our year-end, lump sum retiree health-benefit and pension related payments,” the report said.

That seems to be more dire assessment than the one Brennan gave to a House committee last year. She said then that the USPS would run out of cash in 2024.

“This is the most candid the Postal Service has ever been about its financial challenges,” said Paul Steidler, a senior fellow at the Lexington Institute based in Arlington, Va.

Even so, Steidler said the agency should have offered more details about its pending debts to the U.S. Treasury.

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