IG, regulator bash USPS plans to slow some mail delivery

One of the U.S. Postal Service’s key reform initiatives is worsening service and raising costs, a recent inspector general report found, contrasting the agency’s claims about the impact of its changes. 

The IG said a pilot program to test USPS’ Regional Transportation Optimization plan, which requires mail to sit overnight at post offices instead of being collected each evening for transportation to a processing center, caused mail to be delivered more slowly without any associated cost savings. As Postmaster General Louis DeJoy now looks to roll out the initiative on a nationwide basis, postal regulators are expressing concerns of the potential fallout. 

Only some facilities are set to be impacted by the reforms, namely those more than 50 miles from the Postal Service’s new Regional Processing and Distribution Centers. USPS plans to stand up about 60 of those mega-centers, most of which will be located in urban areas. That has led to criticism that postal management’s mail slowdown will disproportionately impact rural communities.

DeJoy has said the change is a key part of his 10-year plan to fix USPS’ finances and operations, noting it would save between $3.6 billion and $3.7 billion annually. The initiative to allow mail to sit overnight at post offices will itself account for $651 million in savings, per USPS estimates. 

In the pilot phase of the initiative, which affected 15 regions across the country, transportation costs actually increased by $7 million, the IG found. The auditors called on USPS to better track its cost savings, noting the agency had not implemented any analysis at the time of its review, and postal management agreed to do so. 

USPS leadership added that it expects costs to stabilize as the initiative matures and said it had to award emergency contracts and add staff in some cases due to unexpected performance issues. DeJoy recently told Congress some hiccups along the way were expected, noting “the first rockets that went to the moon blew up.”

Postal management has said the existing delivery model, in which mail is collected at every post office both in the mornings and in the evenings, is based on a “bygone era of significant single-piece letter mail volumes.” While the system may have made sense in that reality, USPS said, it has “engendered costs impossible to justify in today’s environment.”

Service dipped in all 15 regions where the new schedule was implemented, the IG found, with on-time delivery of single-piece, first-class mail dropping by 16 percentage points on average. The changes impacted five times as many rural mailers as urban ones and complaints from postal customers spiked. Some employees even took to instructing customers to take their mail to facilities unimpacted by the changes to ensure speedy mail delivery. 

The IG faulted USPS for failing to adequately notify customers of the reforms and management said they would ensure better engagement going forward. The auditors cautioned the plan could have a widespread impact on postal business. 

The changes may ultimately “reflect negatively on the Postal Service brand and goodwill, impact public perception, and potentially drive customers to alternative sources for their mailing needs,” the IG said. 

Postal officials acknowledged they cannot implement all of their reforms without slowing mail for some and are asking the Postal Regulatory Commission for an advisory opinion on a proposal to expand the initiative. Postal management also recently announced lower targets for 2025, with USPS now saying, for example, it expects to deliver regular cards and letters slated for two-day delivery on time just 87% of the time in fiscal 2025 compared to its goal of 93% in fiscal 2024. For mail scheduled to be delivered in three-to-five days, USPS now hopes to deliver 80% on time compared to 90% in fiscal 2024.

In an initial hearing on the proposal last month, PRC commissioners voiced skepticism of DeJoy’s changes and his larger Delivering for America plan. They suggested the reforms have so far led only to worse outcomes. 

“What we've been seeing is declining service, higher prices and continued poor financial results,” said PRC Chairman Michael Kubayanda. “If there is an upside in exchange for these painful changes, we have yet to see it.”

Robert Taub, now PRC’s vice chair, noted he would have hoped to see more progress by the fourth year of DeJoy’s vision taking effect. 

“If there is a status quo, the status quo seems to be the Delivering For America plan and its continuation,” Taub said, “and it concerns me because it reminds me of the old quote of the definition of insanity is continuing to do the same thing and expect a different result.”

PRC is expected to issue its opinion this month, though its ruling is non-binding. The commission has repeatedly expressed concern over DeJoy’s reforms and earlier last year called on him to pause all changes to his network.

DeJoy has also faced bipartisan pushback from lawmakers over his RTO initiative, including at recent congressional hearings that turned testy. DeJoy vehemently defended his efforts during hearings last month and said anyone standing in his way would bring about the end of the Postal Service. 

Sen. Josh Hawley, R-Mo., became angry with DeJoy when discussing his plan to slow down delivery for some mail, which he said would disproportionately impact his constituents. 

“I hate this plan and I’m going to do everything I can to kill it,” Hawley said. 

He pledged to “go to the mat” on the issue and work with everyone on the committee to sink DeJoy’s plan, vowing to “go down with the ship” if necessary. The senator raised his voice and said he was no longer interested in being nice to DeJoy, was growing tired of his initiatives and had “waited and waited and waited” for improved performance. 

“You won’t go down with the ship,” DeJoy responded. “If you’re successful, the Postal Service will go down.”