Amid ongoing losses and bipartisan pressure, DeJoy remains defiant in pushing USPS reforms

In the face of mounting pressure from lawmakers of all political stripes, watchdogs, stakeholders and even members of its own governing board, as well as another financial quarter in the red, leadership of the U.S. Postal Service is doubling down on its controversial plan to overhaul the agency. 

USPS posted a net loss of $1.5 billion in the second quarter of fiscal 2024, though management noted that was trimmed to a $300 million loss after dispensing with costs outside of its control. USPS leaders boasted they have turned a $200 million profit in the first half of the fiscal year using that same metric, which marked a $600 million turnaround compared to the first six months of fiscal 2023.

While First-Class mail volume has continued its longstanding decline, revenue grew in the quarter by nearly $500 million due in large part to the dramatic price increases USPS has instituted. The Postal Service has cut $100 million in costs, driven largely by a reduction in transportation expenses and slashing 9 million work hours. 

On-time delivery of mail, however, has plummeted as USPS has instituted significant reforms to its network as laid out in Postmaster General Louis DeJoy’s 10-year Delivering for America plan. USPS delivered just 84% of First-Class mail on time so far this fiscal year, compared to 91% in the first half of fiscal 2023. Service deterioration has sparked widespread criticism of the changes, including from both parties, large-scale mailers and the agency’s regulator. It also led to a testy moment at a board of governors meeting on Thursday, when Ronald Stroman, a former USPS deputy postmaster general and current board member, said USPS should halt its reform efforts. Such a decision, he said, would minimize the impact of service declines, prevent future issues from arising, offer more time for management and employees to make adjustments to the plans and give the American public more confidence in the mailing system ahead of the upcoming election.

“I believe we need to slow down new network changes until service has gotten close to our service targets for 2024,” Stroman said. 

DeJoy, who spoke before Stroman made his comments, remained steadfast that his approach is the right one. 

“This is what we must continue to do to survive,” DeJoy said. “We must evolve and that means change.”

Prior to his arrival, he said, postal management’s plan amounted to either “do nothing” in the face of overwhelming financial losses or “make believe it wasn’t happening.” He once again asked his detractors to have patience, noting his changes were designed to create long-term success even if that meant short-term disruptions. 

“Along this hard journey, we are also experiencing failures,” DeJoy conceded. “Why wouldn't we be, given the magnitude of the transformation we are undertaking and a devastating trajectory we're trying to change?” 

The postmaster general remained defiant despite pressure ramping up on him from multiple angles. On Wednesday, a bipartisan group comprising more than one-quarter of the Senate and broad ideological spectrum of lawmakers in the chamber sent a letter to postal management demanding it pause and reverse its reform efforts until the Postal Regulatory Commission can weigh in on their impacts. 

They accused DeJoy and USPS of moving forward with their plans without consulting with the public, while causing "critical delays" to the mail. 

“We call on USPS to pause all changes, pending a full study of this plan by its regulator,” the senators said. “While USPS claims these changes overall will improve service while reducing costs, there is evidence to the contrary in locations where USPS has implemented changes so far. USPS must stop implementation, restore service in those areas where changes were implemented, and fully understand the nationwide effects of its plan on service and communities.”

The letter was led by Sens. Gary Peters, D-Mich., who chairs the Homeland Security and Governmental Affairs Committee, Susan Collins, R-Maine, Jacky Rosen, D-Nev., and Cynthia Lummis, R-Wyo. Sen. John Cornyn, R-Texas, who is running to be the next Republican leader in the Senate, was also among the 26 signatories. 

Postal management has stated it does not require any additional PRC advisory opinion for the changes it has made so far, though it left open the possibility of requesting one in the future. 

PRC said last month that while postal leaders have insisted the negative impacts are temporary, they have not shown any evidence to support that contention. The watchdog is now seeking increased scrutiny of the agency’s reforms, asking USPS to either request an advisory opinion from the commission or to justify why it does not require one. 

PRC’s order and the senators’ letter are focused on the Postal Service’s consolidation of mail sorting away from individual post offices in favor of centralized centers and the moving processing operations away from hundreds of cities and towns in favor of 60 mega-centers throughout the country. They also relate to USPS' new “optimized collection plan” that will require mail to sit overnight at post offices instead of being collected each evening for transportation to a processing center.

DeJoy sought to knock down criticism from members of Congress and his regulator, suggesting they do not possess the expertise he has brought to the role. 

“Has anyone in Congress or the PRC ever worked to stem $160 billion in projected organizational losses, while overcoming the devastating impact to an organization that nearly $100 billion and previous losses inflicts?” DeJoy asked, before emphatically answering his own question. “The answer is no.”

He apologized for the "deteriorated performance" that has occurred and vowed to soon reverse it, while adding the change that is necessary is "hard, uncomfortable for everyone and encounters errors of varying magnitude."

If USPS does not see a turnaround quickly, Congress’ patience could run thin and opt to take matters into its own hands. Sen. Jon Tester, D-Mont., has introduced legislation that would place new restrictions on the Postal Service’s changes.