Know-how has afforded us the flexibility to attach with almost anybody, anytime—and freed from cost. However there’s simply one thing nostalgic and tactile about receiving a letter or postcard through snail mail, whether or not or not it’s a marriage invitation or postcard from a beloved one far-off.
However many even have a love-hate relationship with the US Postal Service. Mail is misplaced, undelivered—and even returned, generally with a legitimate postmark and deal with. Certainly, “the Postal Service’s ability to provide acceptable service is an ongoing concern across the United States,” according to the Office of Inspector General for the United States Postal Service.
But USPS announced Tuesday a proposed 8% worth hike for stamps, bringing the price of a first-class mail ceaselessly stamp to $0.73. It’s simply one other signal of the unfavorable leadership of Postmaster Common Louis DeJoy, who was appointed by former President Donald Trump. DeJoy was a significant Republican Get together donor and Trump fundraiser—and was additionally the primary postmaster common in 20 years with out prior USPS expertise.
Below DeJoy, the USPS has been bleeding cash. Within the first quarter of fiscal 2024 alone, USPS reported a $2.1 billion web loss, greater than double its $1 billion web loss throughout the identical time interval final 12 months.
“Under DeJoy, USPS has not adequately been controlling labor costs, while quality of service has been going down and prices going up,” mentioned Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a suppose tank that makes a speciality of productiveness and innovation points. “This is not sustainable, and the more prices go up the more volumes go down, until USPS hits a death spiral.”
However DeJoy, who was previously under investigation by the FBI in reference to previous political fundraising, says he has a 10-year plan to revive the postal service. He’s been in his position since June 2020, and plans to serve his whole appointment. Plus, President Joe Biden doesn’t have the facility to take away him from his put up, regardless of how badly the company is struggling.
“Get used to me,” DeJoy said in February 2021. The postmaster common is appointed by the Board of Governors of the Postal Service—and might solely be dismissed by this group, not the president. Nonetheless, the governors are appointed by the president, and in 2022, 83 public curiosity teams led by the Save the Submit Workplace Coalition despatched a letter to Biden urging him to appoint postal board of governors candidates who would maintain DeJoy accountable for his “destructive leadership and advocate strongly for the expansion of USPS services.”
“The president’s nominees should provide a diversity of life experience to more accurately represent both the postal workforce and the nation overall—not just another rich white man like Louis DeJoy,” Porter McConnell, cofounder of the Save the Submit Workplace Coalition, mentioned in a statement.
Why the USPS retains upping its costs
That is the second time in six months that USPS has requested to boost service costs, most just lately hiking shipping service rates 5.4% in November 2023.
“Pricing changes in the mailing and shipping marketplace continue, [and] these price adjustments are needed to achieve the financial stability sought by the organization’s Delivering for America 10-year plan,” a USPS spokesperson tells Fortune. “The Postal Service prices remain among the most affordable in the world.”
Whereas this can be—at floor stage—a part of DeJoy’s grasp plan to treatment poor service throughout the nation, the entity doubtless gained’t be capable to proceed to boost costs indefinitely, consultants say.
“USPS is raising prices because it consistently loses money on its business and subsidizing the USPS with general tax dollars is unpopular—and unnecessary,” Stephen Henn, adjunct professor of economics and finance at Sacred Coronary heart College, tells Fortune. Plus, USPS can’t be as worthwhile as FedEx or UPS as a result of the price to mail letters and packages nonetheless is relatively less expensive than utilizing a for-profit possibility.
Among the components that contribute to dissatisfaction amongst USPS customers—and total decreased productiveness—embody diminished mail volumes, elevated working prices, and a “rapid shift” towards digital communications, Robert Khachatryan, CEO of Freight Proper World Logistics, tells Fortune.
In keeping with DeJoy’s 10-year plan, he hopes to modernize operations and improve competitiveness within the transport and mailing business whereas mail volumes decline, Khachatryan says. However it additionally seeks so as to add funding to handle ongoing USPS service challenges throughout the nation. Almost each U.S. state is beneath goal ranges for on-time service, in keeping with Office of Inspector General for the United States Postal Service information.
“The push for price increases partly stems from the ongoing challenge of maintaining acceptable service levels,” Khachatryan says. “The Office of the Inspector General’s reports highlight service as a persistent concern, suggesting that additional revenue from higher prices could be directed towards improving operational efficiencies and customer service.”
Plus, USPS has necessities that for-profit companies like FedEx and UPS don’t. USPS has to ship first-class mail to each deal with within the U.S. on the identical fee, regardless of the gap.
“Sending Grandma a holiday card costs the same whether sent from Maine to New York or Maine to Hawaii,” Henn says. “For-profit companies can charge based on the cost of delivering from Maine to New York or Hawaii.”
Regardless of the challenges of competing with for-profit organizations, DeJoy stays assured that he can rescue the ailing company within the years to return.
“I grow more confident in our ability to deliver to the nation a postal service whose best days are in the future,” DeJoy advised the USPS Board of Governors in February. “We are in a race to a finish line that changes our financial and service trajectory before we run out of cash and require other means of funding.”
However different consultants don’t have as rosy an outlook for the company, which technically operates independently from the manager department of the U.S. federal authorities.
“The Postal Regulatory Commission needs to stop being so passive and start holding USPS accountable to cut costs and boost efficiencies,” Atkinson says. “Congress may well have to intervene as well, because the current trend is not sustainable.”
