Opinion: Will There Be DeJoy in USPS-Ville?

USPS Louis DeJoy feature

It’s an open question whether Louis DeJoy will survive in his highly politicized position as Postmaster General long enough to see the wide-ranging reforms he wants to enact realized, or at least started. The jury – or in this case, the Senate – is out on that one.

Specifically, President Biden last month put forward three candidates for the U.S. Postal Service’s board of governors. The general expectation being that that once confirmed by the 50/50 Senate and Vice President Kamala Harris as the tiebreaker, their first official act would be to bag DeJoy.

Meantime last week, DeJoy laid out an extensive 10-year plan for reforms to the U.S. Postal Service, in an attempt to make the red ink-soaked agency more solvent while improving its performance. The plan calls for reaching break-even by FY 2023, thus avoiding $160 billion in projected losses, and investing $40 billion in the USPS workforce, new vehicles, plus improvements at local post offices, infrastructure upgrades and technology implementation.

It also asks Congress, once again, to eliminate the heavy albatross of prefunded retiree healthcare benefits. The plan calls for integrating the benefits with Medicare, calculating the liability based on vested employees and requiring all future retirees to enroll in Medicare at age 65 as a precondition for receiving the employer benefit. The USPS calculates that this, along with changes to the pension system, would save a projected $58 billion over 10 years.

A Greek chorus of critics immediately assailed a main feature of the plan: Making mail delivery slower and reducing service hours.

Consequently, many angry voices who had already been calling for DeJoy’s head have pumped up the volume. This includes a snarkily-named legislative proposal from Democratic members of Congress called the DEJOY Act – for Delivering Envelopes Judiciously On-time Year-round Act – seeking to countermand his proposed reforms.

On top of that, DeJoy and the USPS are under heavy fire for a plan to award a $6 billion contract for 165,000 new delivery vehicles to Oshkosh Corp. – not to be confused with the kid’s clothing line – that calls for 10% electric vehicles. Many were expecting and hoping the USPS would instead choose electric vehicle manufacturer Workhorse Group and go all in on EV. This has led to a separate hue and cry, with a group of Democratic legislators asking to halt the Oshkosh contract until it could be reviewed.

With mail volume continuing to decline as consumers grow increasingly digital in their communications, including bill paying, the bulk of flat items that remain are marketing and advertising materials. But many, especially older Americans, still rely on mail service to receive critical items like government checks and prescription medications.

Still, the USPS’s potential for growth and profitability is clearly tied to parcel delivery, which has been steadily on the rise as ecommerce continues to explode. The new 10-year plan places a great deal of focus and investment in that area, where the USPS faces stiff competition from frenemy Amazon and FedEx, which last year began diverting volume out of Parcel Select and into its own ground network.

That would be a good thing after the USPS’s poor performance this past peak holiday season. There were historic delays as packages piled up in sortation facilities nationwide. To be fair, this was due in large part to a deluge of volume refused by the other major carriers, themselves dealing with overloaded networks – all of which the USPS is obligated to handle.

But with the Democrats threatening to make good on their threat to remove DeJoy, through getting rid of the current USPS board of governors appointed during the Trump administration – as was DeJoy himself – the prospects of seeing the reform plan enacted remains clouded.

Regardless of the outcome of DeJoy’s tenure, serious postal reforms are long overdue and hopefully won’t get further bogged down in the political quagmire. Tens of thousands of SMB ecommerce shippers still rely on it daily to get orders to customers, although many have been seeking carrier alternatives due to chronic service-level issues, the worst example being the recent peak season.

So, stay tuned to see how the drama in Washington plays out. Considering the critical importance and irreplaceable nature of the USPS, with its every-ZIP-every-door-every-day mandate, a lot hangs in the balance.