Analysis: Postal Service doesn’t need a bailout; it needs new leadership and new thinking

Change is coming to the U.S. Postal Service. President Trump has appointed a new postmaster general, Louis DeJoy of North Carolina, who is co-chair of the committee planning the Republican National Convention. Mr. DeJoy is an outsider — he comes from the logistics business and real estate — and is the first postmaster general not to come up through the ranks in more than two decades. The president has a Postal Regulatory Commission board in place to carry out his proposed reforms. David Williams, an ally of the old regime and the only member of the Postal Regulatory Commission not appointed by President Trump, resigned last week over disagreements with other board members on the conditions they agreed to accept to get a $10 billion line of credit as part of the first coronavirus legislation. That leaves the board with three Republicans and only one Democrat. Mr. Trump’s frustration with the slow pace of change and resistance to new thinking in recent weeks hastened the appointment of Mr. DeJoy. The president has noted that Mark Meadows, now his chief of staff but then the top Republican on the House Oversight Committee, last year asked Megan Brennan, the current postmaster general, to show how she planned to rectify the Postal Service’s disastrous finances. She still has not produced a plan, and now she never will. The president, who has called the Postal Service “a joke” in recent weeks, has balked at requests from the Postal Service and some of its Democratic allies in Congress for a $75 billion no-strings-attached bailout. He says no money should be included in the upcoming fourth coronavirus stimulus legislation unless the agency raises prices on Amazon and other large shippers immediately. The president is on the right track. The Postal Service doesn’t need a bailout; it needs new leadership and new thinking. The president also is right about the problem: The Postal Service doesn’t know how to price its products, specifically package delivery, in a way that permits it to balance the books. First-class mail, the Postal Service’s most profitable product, has declined 44 percent since fiscal 2006. Marketing mail has declined 27 percent over roughly the same period. About 36 percent of the nation’s 34,600 postal outlets lose money. But despite decreased demand and increased expenses, the Postal Service added about 13,000 employees and increased total compensation costs by $1 billion in just the last year — and that’s with new hires earning less and non-career employees increasing. Its compensation costs are higher than any other major shipper. The products on which the Postal Service has a monopoly — first-class mail and the right to put things in mailboxes – are regulated by the Postal Regulatory Commission and generally rise only with inflation. But the so-called competitive prices — those in areas such as package delivery where private-sector firms also participate — are supposed to meet attributable costs. And that’s the problem — they don’t. Even though it is exempt from state and local taxes, income and property taxes, parking tickets, vehicle fees or other charges — and pays federal tax to itself — the Postal Service has lost money for 13 straight years for a total of $69 billion.

Thanks to Brian McNicoll for that informative piece.  Glad to see we’re getting new leadership at USPS.  It’s long overdue.  For more, click on the text above.

Fact Check: The Math Adds Up for Trump’s Claim That USPS Undercharges Amazon

Following a tweet from President Trump today where he called out Amazon and the United States Postal Service, Breitbart News investigated Trump’s claims. “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!” Trump said in a tweet posted on Friday. Trump’s claim that the USPS is losing billions of dollars is entirely correct, in 2016 the USPS announced a $5.6 billion net loss and in 2017 stated a $2.7 billion net loss, making this the eleventh year that the Postal Service has announced a loss. The total from 2007-17 amounts to a staggering $65.1 billion in losses. Things do not seem to be looking up for the organization anytime soon, with the USPS predicting in their public 2018 Integrated Financial Plan that they would suffer a net loss of $5.2 billion in 2018. With mail volume at a 29 year low and amassing large amounts of debt, the Postal Service is facing a tough time ahead. However, a bipartisan bill has been proposed that would help the Postal Service. The USPS operates under a law from 2006 that restricts how much they can charge for stamps, how much they must pay into retiree health funds, and other general restrictions on business operations. Some elements of that law expired in 2016, such as the one stating that USPS must pay $5.4 billion to $5.8 billion into retiree health funds, but this new bill would see the law revamped entirely to help the Postal Service compete in the modern age. “Once enacted, and together with aggressive management actions, the Postal Service can meet all of our obligations and continue to improve the way we serve the American public,” said Postmaster General Megan Brennan in testimony to Congress. Another element hampering the Postal Service is the price it charges to deliver packages for e-commerce giant Amazon. A Citigroup analysis in July of 2017 found that a subsidy of $1.46 was attached to every Amazon package delivered by USPS due to the Postal Service delivering the company’s packages below their own costs. It was determined in 2007 by the Postal Service and its regulator that a minimum of 5.5 percent of the Postal Service’s fixed costs must be allocated to package deliveries. Ten years later, despite 25 percent of USPS’s revenue coming from packages, the percentage of fixed costs allocated to packages has not increased enough to become profitable. According to Citigroup’s analysis, if these costs were fairly redistributed and allocated, the average parcel would cost around $1.46 more to deliver. Amazon has used a method called “postal injection” to save money on their own deliveries, delivering pre-sorted Amazon packages to local post office delivery depots for “last mile” deliveries to be made by the USPS at a greatly discounted price. With Amazon warehouses located near many USPS depots, Amazon has managed to outsource almost two-thirds of their deliveries to the United States Postal Service. So is President Trump right in saying that the USPS should be charing Amazon much more? Based on the current figures relating to the number of packages the USPS delivers for Amazon, the price they charge for delivery, and the Postal Service’s current financial state, the answer is clearly yes.

USPS broke law in allowing workers to boost Clinton campaign, watchdog says

The United States Postal Service violated federal law by letting employees do union-funded work for Hillary Clinton’s campaign and other Democratic candidates while on leave from the agency, according to an Office of Special Counsel report obtained by Fox News. The OSC determined the USPS “engaged in systemic violations” of the Hatch Act, a federal law that limits certain political activities of federal employees. While employees are allowed to do some political work on leave, the report said the Postal Service showed a “bias” favoring the union’s 2016 campaign operation. The investigation was launched months ago after Senate Committee on Homeland Security and Governmental Affairs Chairman Ron Johnson, R-Wis., brought constituent complaints to the OSC in October. The constituent, identified as a USPS employee, was concerned the Postal Service “incurred unnecessary overtime costs” and “improperly coordinated” with the National Association of Letter Carriers (NALC) when it released members for several weeks of “union official” leave without pay to participate in campaign work. “The Labor 2016 program sought to ‘elect Hillary Clinton and pro-worker candidates across the country,’” the report said, citing campaign work like door-to-door canvassing, phone banks and other get-out-the-vote efforts. According to the report, roughly 97 NALC members requested the leave without pay to participate. The NALC, which endorsed Clinton last June, compensated those USPS workers using the Letter Carrier Political Fund, the union’s PAC. According to the report, 82 percent of the work took place in 2016 battleground states: Florida, Nevada, North Carolina, Ohio, Pennsylvania and Wisconsin. Officials at multiple levels apparently were involved. According to OSC Acting Special Counsel Adam Miles, the NALC provided lists of letter carriers to participate in campaign activity to a senior headquarters USPS labor relations official, who then emailed the lists to other USPS officials across the country. According to Miles, the local officials “interpreted the communications as directives” from USPS headquarters to release the carriers on union official leave without pay. According to the report, local supervisors raised concerns about the impact this would have on postal operations and initially objected to releasing them, but USPS managers instructed local supervisors to let the workers participate. “We concluded that the USPS practice of facilitating and directing carrier releases for the union’s political activity resulted in an institutional bias in favor of NALC’s endorsed political candidates, which the Hatch Act prohibits,” Miles said in prepared testimony before the Senate Homeland Security Committee, which is set to hold a hearing Wednesday on the matter.

Wow…  This is huge!  IF true, people should be fired, fined heavily, and go to prison.  This story is developing…

US Postal Service picks finalist to build next-generation mail truck

The United States Postal Service will be getting a special delivery next year. Fifty of them, actually. The USPS has issued contracts to six suppliers to develop and build prototypes for the Next Generation Delivery Vehicle, which will replace the Grumman Long Life Vehicle (LLV) that’s been in use since 1987. Out of the fifteen companies that qualified to submit proposals, the six that were chosen are AM General, Oshkosh, Utilimaster, VT Hackney, Turkish commercial vehicle builder Karsan, and India’s Mahindra, which has a major technical center in Troy, Michigan. None of the designs have been revealed, but the preliminary requirements called for right-hand-drive, sliding curbside doors for driver and cargo, a payload capacity of 1,500 pounds, interior height of six feet four inches, and an overall length of 19 feet. The USPS has prepared a generic rendering of what such a vehicle might look like. It’s also expected to have either an aluminum or composite body and deliver significantly better fuel economy and emissions performance than the LLV. The USPS says that half of the prototypes will feature hybrid or alternative fuel powertrains. VT Hackney will be teaming up with Workhouse, which has a range-extended electric chassis currently used for a United Parcel Service truck — not to mention a drone-equipped concept — while AM General’s submission will offer a zero emissions option. Together, the six companies will build a total of 50 prototypes at a combined cost of $37.4 million. They’re due by September, 2017, after which they’ll undergo six months of testing in a variety of climates and environments. Production of the winning entry or entries is scheduled to begin in late 2018, but they could have some competition, as the USPS will soon issue a request for proposals for an off-the-shelf delivery trucks based on existing production vehicles that will also be evaluated for use in its fleet.