U.S. Postal chief vows more ‘aggressive actions’ after missing financial target

By David Shepardson

WASHINGTON (Reuters) -U.S. Postmaster General Louis DeJoy will tell lawmakers on Wednesday he plans to take more “aggressive actions” after saying the agency will not meet its goal of breaking even in 2023.

The U.S. Postal Service (USPS) has reduced projected losses from $160 billion to $70 billion over 10 years after winning financial relief from Congress, instituting regular price hikes and adopting reforms.

DeJoy will tell the U.S. House Oversight Committee in testimony seen by Reuters that the “2023 break even goal proved to underestimate some organizational, operational, and financial challenges, and some economic factors that we are now facing that we could not have foreseen.”

“We will be taking more aggressive actions to get back on track,” he will add, without giving details.

Inflationary pressures have added $3 billion in USPS costs over the last two years.

“Breaking even in 2023 was certainly part of our goal, but we were not willing to do so at any cost and we were not willing to put the broader reforms at risk,” DeJoy’s testimony says. “If we stay the course and avoid the significant mistakes of the past, we can more than just avoid the inevitable path to insolvency.”

His testimony cites declines in mail volume that continue to “trend downward faster than projected. Relatedly, businesses are reducing their advertising spend, impacting all modes of advertising dollars, including advertising through the mail, which translates to mail volume impacts.”

DeJoy will say that USPS projects mail volume will fall by another 36% by 2030 after falling 42% between 2007 and 2020.

USPS is raising prices twice yearly and said last month it expects its “new pricing policy to generate $44 billion in additional revenue” by 2031. USPS said in April it plans to hike the price of first-class mail stamps to 66 cents from 63 cents.

President Joe Biden signed legislation in April 2022 providing USPS with $48 billion in financial relief over a decade, requiring its future retirees to enroll in a government health insurance plan.

USPS wants government accounting changes for retirement contributions that would save USPS up to $34.6 billion over 10 years.

DeJoy’s testimony paints a dire picture USPS faced in June 2020 when he arrived. “The organization’s existence was in peril. The Postal Service was projected to lose $20 billion that year and run out of cash in 60 days,” DeJoy said. Congress gave USPS a $10 billion COVID expenses loan it later forgave.