PMG DeJoy declares USPS rate increases will continue

Washington Postal Scene by Bill McAllister

Postmaster General Louis DeJoy can be disarmingly candid at times.

That was the case May 5 when he expressed delight that Congress finally had removed some of the financial shackles it had placed on the United States Postal Service.

But he followed that with a blunt caution that he is not about to slack off on his requests for higher postal rates.

“While the impact of the Postal Reform Legislation is helpful — this is approximately a $50 billion dollar offset against a projected $160 billion dollar 10 year loss,” DeJoy said.

That means, the postmaster general said, “there is a lot left to do.”

And DeJoy made clear the USPS is going to continue to be revenue hungry.

“While our pricing decisions are ultimately made under the authority of the Board of Governors, in the near term, I will most likely be advocating for these increases,” he said

That was bad news for some large mailing groups that have been urging DeJoy to go slower on rate increases.

“The mailing industry needs to be prepared for continued use of our authority to raise prices on market-dominant products at an uncomfortable rate until such time as we have accomplished our objective of projecting a trajectory that shows us becoming self-sustaining, as required by law,” the postmaster general said.

DeJoy’s comments were made at the May 5 board of governors meeting where officials disclosed how first-class mail revenues are rising while first-class mail volumes are continuing to plummet.

During the second quarter of fiscal year 2022 which ended March 31, the USPS had first-class mail revenues of $6.2 billion, up from $5.9 billion in the same quarter of fiscal 2021, a 5 percent gain.

First-class mail volume fell 0.6 percent “due to continuing migration from mail to electronic communication and transaction alternatives,” the Postal Service said in a May 5 news release.

“First-class mail volume remains lower than pre-pandemic levels and we expect continued secular declines,” the USPS said. “Revenue grew despite the decline in volume due to price increases.”

Overall, the USPS said it had an adjusted loss of approximately $1.7 billion for the second quarter, essentially the same as it lost in the same quarter of 2021.

The adjusted loss excludes several items, such as discount rate changes, that the USPS says are outside of its control.

The Postal Service’s operating revenue for the quarter was just under $19.8 billion, compared to almost $18.9 billion in 2021.

Using generally accepted accounting principles, the Postal Service said it had a net loss of $639 million for the quarter, compared to $82 million in the same quarter of 2021.

For the first half of the fiscal year, the USPS recorded a net loss of $2.2 billion, compared to a profit of $236 million in the first half of fiscal 2021.

Revenues for the first half of the year totaled $41.1 billion, compared to $40.4 billion in the previous year.

DeJoy decried the Postal Service’s previous pricing decisions, saying the agency had been “severely damaged by at least 10 years of a defective pricing model.”

That legacy “cannot be satisfied by one or two annual price increases — especially in this inflationary environment,” DeJoy said.

DeJoy also used the meeting to reinforce his plan to move cautiously on buying electric mail delivery trucks.

“We are confident we made the best decision for the Postal Service considering our delivery profile,” he said.

The postmaster general also pointed out that USPS is developing plans to “reinvent and modernize” its network of mail- processing centers and mail delivery units.

“We are ready for our long journey to make both the transactional and structural improvements required to finish what we set out to do … Deliver for America,” DeJoy said.

Several speakers at the meeting said the new Postal Service Reform Act of 2022 and DeJoy’s 10-year Delivering for America plan are moving the agency toward self-sufficiency. 

Joseph Corbett, the Postal Service’s chief financial officer, warned that the USPS balance sheet “is still too weak.”

The USPS said it expected some financial gains from the new postal law would be included in the agency’s third-quarter results.

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