David Steiner: USPS will be out of cash in less than 12 months
On 17 March, USPS Postmaster General and CEO David Steiner told Congress the Postal Service is nearing a “breaking point” amid a “severe financial crisis facing the Postal Service.”
“Less than a year from now the Postal Service will be unable to deliver the mail if we maintain the status quo,” he said.
Steiner said the crisis is largely driven by a collapse in mail volumes. “From the historic peak volume of 213 billion pieces per year in 2006 to 109 billion pieces today, we have lost over 104 billion pieces per year,” he said, adding: “No company could weather that much revenue loss.”
He also pointed to regulatory constraints. “Our regulator ensures that we won’t make money or break even,” Steiner said, criticising limits on pricing flexibility and mandated costs that “cost us billions of dollars every year.”
Additional financial pressures include pension obligations and borrowing limits. The Postal Service is “required to pay a disproportionately high share” of certain retirement costs, while “we cannot borrow more than $15 billion.” At the same time, universal service requirements mean “71 percent of our delivery routes… financially underwater.”
Despite this, Steiner said USPS has reduced costs and improved operations. He noted that the agency has “reduced total work hours… 56 million hours over the past four years” and generated “approximately $1 billion in savings.”
Service performance has also improved, with “90.45 percent of mail and packages” arriving on time, although he acknowledged that “we are not yet where we need to be.”
On pricing, Steiner said “at 78 cents, the U.S. First-Class Stamp is the lowest-priced in the industrialized world,” adding that raising prices modestly “would largely solve our controllable loss.”
He called for a “Goldilocks” approach to reform, including higher borrowing limits, changes to pension obligations and more flexible investment strategies, which he said could “cut the Postal Service’s financial losses nearly in half.”
