Only Congress can rescue USPS, says postal commissioner

US postal commissioner Mark Acton yesterday called on America’s lawmakers to act now to pass urgent postal reforms. Although the Postal Regulatory Commission is currently in the process of considering major changes to the US Postal Service network and its First Class Mail service standards to reduce operating costs, the Commissioner said only Congress could make the kind of changes that would actually rescue USPS.

The Postal Service is currently making losses averaging as much as a billion dollars a month because mail volumes have declined 25% in the last five years, while operational costs have risen.

Despite plans to reduce the size of the USPS mail processing network by more than half, Acton warned yesterday that only the US Congress could implement the kind of changes to issues like pension and healthcare financing that are needed to bring USPS back into the black.

“The Postal Service is not going to be able to earn its way out of the current situation – it is billions and billions in debt,” said Acton, one of two Republicans on the five-member Commission.

“There is going to have to be profound legislative change and some of the important questions like Saturday deliveries, pension and healthcare finances, service standards need answers. Only Congress has the power to make the change.”

The US Congress must come to terms and send the President a bill,” added Acton.

Acton was speaking yesterday at the World Mail & Express Americas conference in Miami, in front of more than 200 officials from across the global industry.

Congress

Postal reform bills moved out of committee toward the end of last year in both the US Senate and the US House of Representatives, but while they are now headed for floor hearings in the respective chambers, neither bills have an easy journey toward the statute books.

USPS executives have said neither bills in their current forms will be enough to save the Postal Service.

The Senate bill has had its floor hearing put back from initial hopes of a January date, with controversy over issues like the closing of mail facilities and the proposal to eliminate Saturday deliveries to save up to $3bn a year in operating costs.

Vermont’s US Senator Bernie Sanders has been vocal in recent days in demanding reforms to USPS pension and healthcare financing instead of widespread facility closures. He said yesterday that he had received a letter from USPS Inspector General David Williams that had described USPS as “flush” with money because of its multi-billion dollar pension overpayments. USPS needs Congress to access pension overpayments that have been calculated as being at least $11bn in total.

Sanders said yesterday that the Postal Service should be released from what he called an “onerous and unprecedented burden” of being forced to put $5.5 billion every year into their future retiree health benefits fund. 

Even if there are no further contributions from the post office, and if the fund simply collects 3.5 to 4 percent interest every year, that account will be fully funded in 21 years, Sanders said. Even with those changes, Sanders said the Postal Service needs reforms to make it competitive in the e-mail era. 

“Let’s be clear: these short-term accounting efforts will not solve the long-term financial problems facing the U.S. Postal Service.  In order to do that, the Postal Service needs to adopt an entirely new business model which makes it much more entrepreneurial, pro-business, and pro-consumer compared to where it is today,” Sanders said.

Yesterday Commissioner Acton echoed this sentiment, saying: “The law is not keeping up with the quickly-changing technology.”

Amendments

Various amendments are being drawn up for the Senate bill, dubbed the 21st Century Postal Service Act, that could include measures to increase the flexibility for USPS to get into new areas of revenue generation that might include more digital communications technologies and new services on behalf of federal agencies.

Steve Lopez, the chairman of the US mailers’ group Postcom said there were some “big revenue opportunities” on the horizon if Congress could give USPS more flexibility to expand its product range.

“Last Friday an amendment came forward that if passed would allow the Postal Service to deal as a federal agency working for state governments and agencies – there’s big revenue opportunities here with America’s 300m population. These are billion-dollar ideas.”

Lopez, who also works for the world’s biggest credit ratings agency Experien, said a particular potential for USPS would be in providing identity verification services, building on its reputation as America’s most trusted government agency.

Such services would have have huge scope with the current boom in e-commerce activity, he suggested at the Miami conference organised by Triangle, publisher of Post&Parcel.