Cutting Post Office Hours, Closing Plants and Slowing Mail Accompany Growth Efforts in USPS Break-Even Plan

The U.S. Postal Service will raise its prices faster, slow some of its mail delivery and close some of its facilities as part of a business plan embattled Postmaster General Louis DeJoy said on Tuesday will allow his agency to break even in 10 years. 

The plan was widely anticipated and quickly earned both plaudits and criticisms from stakeholders, though its details contained few surprises after DeJoy spent months teasing them out. The proposal to increase prices has drawn the ire of the Postal Service’s largest customers, while the shift toward slower mail delivery windows has angered lawmakers and other postal observers. 

While DeJoy called his solutions “a bold plan and a break from the past,” neither of those two major proposals is particularly novel. DeJoy’s predecessor, Megan Brennan, sought full autonomy in setting USPS rates, something the agency's regulator rejected, though it did recently allow for larger-than-inflation increases. Brennan’s predecessor, Patrick Donahoe, oversaw the consolidation of hundreds of mail processing plants to allow for slower mail delivery. 

In a new revelation within the plan, the Postal Service said it will resume closing some of processing centers it never got around to shuttering after it paused the closures in 2015. USPS will use “data-driven analytics” to “strategically implement some of those consolidations where facilities remain underutilized.” A 2018 inspector general report found USPS realized just 5% of the $1.6 billion in savings it had projected from the consolidations. The agency successfully shuttered 141 plants in the first phase of its plan, but pulled the plug on its second phase to close an additional 82 plants when it was halfway through. Lawmakers at the time pleaded with postal management to suspend its plan—which would have cost thousands of jobs and further reduced delivery standards—and USPS ultimately agreed with the misplaced hope it would lead to a legislative postal overhaul. 

USPS said it will procure new facilities to accompany the closures and is currently “evaluating the addition of” 45 annex facilities to supplement package processing capacity near existing centers. In an interview on Tuesday, DeJoy said the consolidations were “minimal” and “just for refinement,” while some of the facilities would be repurposed. 

The Postal Service said it can no longer afford to maintain a network that can deliver a piece of mail in three days, whether it is going 300 or 3,000 miles. It delivered less than 88% of mail designated for three-to-five day delivery on time in fiscal 2020, more than 7 percentage points below its target. With the goal of slashing air transportation by 43% for First-Class mail, letters sent within the continental United States could take a maximum of five days under the new plan instead of the current limit of three days. Kristin Seaver, USPS’ chief retail and delivery officer, noted that 70% of First-Class mail would still be delivered within one-to-three days and the changes concern the “fringes of our network.” 

The Postal Service projects it will raise its prices to generate between $35 billion and $52 billion over the next 10 years as part of its “Delivering for America” plan, though DeJoy vowed to use his new authority to raise rates above inflation “judiciously.” It also expects to grow package revenue by $19 to $29 billion. To that end, it will launch a new suite of services called USPS Connect aimed at boosting retail deliveries shipped from stores. Neighborhood businesses will have increased access to local drop points for same or next-day delivery and high-volume shippers will have access to one-to-two day delivery. Businesses will be able to reach 90% of the population in one day and 95% in two days, postal officials said on Tuesday. 

All told, USPS expects to cut $58 billion from its projected losses over the next decade through internal “self-help management” reforms, including both growing revenue and cutting costs. In addition to slowing delivery windows and closing plants, USPS plans to trim hours at “low traffic” Post Offices, reduce late and extra transportation trips and cut overall work hours. 

The plan is making “obvious” changes, DeJoy told Government Executive. He dismissed concerns that other stakeholders may and have voiced criticism, arguing the proposals are non-controversial and growth oriented. 

“It’s my job to steer the organization forward into a successful position,” DeJoy said. “The organization probably has been frozen, in terms of its movement in the past, because of that type of thinking.”

While DeJoy ran into significant hurdles in his first attempt to reform USPS operations, he said he now has better control of the organization and is confident his changes will roll out smoothly. 

“You always run into stop and start issues, but I think we are much better aligned,” DeJoy said. “We’re not making dramatic changes here.”

DeJoy said USPS will aim to cut employee turnover, decrying the agency’s inability to move its topline workforce number despite hiring 200,000 employees last year. The plan calls for cutting turnover of its non-career workforce in half through better opportunities for growth and non-specified “improved retention strategies.” Elsewhere in the plan, however, USPS said it would seek to restrain wage growth, reduce work hours and automate more tasks. 

The agency is currently in the midst of slashing 60,000 employees off its rolls, offering early retirement incentives to much of its non-union workforce. DeJoy said he does not have a specific target in mind for its workforce, speculating he could potentially grow the agency by 100,000 employees to meet growing package needs. He added, however, that the high turnover rates will likely highlight areas for efficiencies. 

The Postal Service plans to reduce its losses by $44 billion through new flexibilities in setting its rates and $58 billion through legislative changes, primarily focused on eliminating its requirement to prefund health benefits for future retirees and integrating eligible former employees with Medicare. House Democrats recently introduced a measure to accomplish that. 

DeJoy said the plan allocated $40 billion for capital investments, including $12 billion to replace USPS' aging vehicle fleet. It will also go toward new package sorting equipment, new facilities, upgrading retail locations and other technology. USPS expects to fund the investments internally, though officials said the agency would require congressional appropriations to boost its use of electric vehicles. 

The postmaster general tasked his leadership team with developing the plan shortly after taking office and the document took eight months to piece together. Officials warned the package must be all-or-nothing in its implementation and any delays would hinder its goal of allowing USPS to break even by 2030. 

“If we encounter roadblocks with any of the major elements, we quickly enter negative territory,” said USPS CFO Joe Corbett. “We simply have to execute well across the portfolio of initiatives and do so in a timely manner.” 

Postal unions, while expressing some openness to the plan and applauding its focus on growth, rejected the all-or-nothing approach. 

“The plan, as drafted, contains both positive attributes as well as some proposals that should be of concern to postal workers and customers,” said Mark Dimondstein, president of the American Postal Workers Union. He praised proposals to improve recruitment and retention and better leverage Post Offices and local networks, but blasted the plan to slow mail delivery. “Any proposals that would either slow the mail, reduce access to post offices, or further pursue the failed strategy of plant consolidation will need to be addressed.” 

The National Association of Letter Carriers similarly approved of "many positive elements" in DeJoy's plan including its investments and service expansion, while noting "obvious concerns" with certain "operational elements." The National Rural Letter Carriers Association called the plan “refreshing” for not proposing to slash employee compensation. All postal unions pledged to work with postal management to fine-tune the plan as it gets implemented.  

Ron Bloom, chairman of the postal board of governors, told Government Executive that many concerns stakeholders had prior to the plan’s release will be assuaged when they dive into its details. 

“Are there going to be individual things that individual people don’t like? Yeah, that’s how it works,” Bloom said. 

Sen. Gary Peters, D-Mich., now the de facto USPS point person in the Senate as the chairman of the Homeland Security and Governmental Affairs Committee, immediately announced concerns with the plan. 

“Cuts to service standards for first-class mail, limiting hours at local post offices, and making it more difficult for people to access postal products would adversely impact USPS customers across the nation, including in rural and underserved communities,” Peters said.