Postal Service Warns of $22 Billion Loss From Coronavirus After Receiving $10 billion From Stimulus
Agency already struggling with losses got $10 billion lifeline in stimulus package but says it faces far greater damage. Postal Service Warns of $22 Billion Loss From Coronavirus After Receiving $10 billion From Stimulus
The U.S. Postal Service is facing a precipitous decline in mail volume and billions of dollars in additional losses as it operates during the pandemic, where hundreds of its workers have fallen sick and a dozen have died from the coronavirus.
The agency’s Board of Governors has asked Congress to provide $25 billion in emergency funding, a $25 billion grant for modernization projects and access to $25 billion in Treasury loans.
“We are at a critical juncture in the life of the Postal Service,” Postmaster General Megan Brennan said in a statement Thursday. “At a time when America needs the Postal Service more than ever, the reason we are so needed is having a devastating effect on our business.”
The Postal Service projects the pandemic to add $22 billion to the agency’s continuing operating losses over the next 18 months, Ms. Brennan said. Mail volumes and purchases of the agency’s services have plummeted with the mandated closures of businesses around the country.
She said losses could hit $54 billion over the longer term and threaten the agency’s ability to operate. Ms. Brennan delayed her retirement earlier this year during a search for a successor.
The Postal Service has faced financial struggles for more than a decade, which it says stem from structural issues like the relentless decline of first-class mail, its most profitable business, and legislation that requires it to prefund retiree health benefits.
It has skipped out on nearly $50 billion in the mandated retiree health-benefit payments, according to public filings. The agency has also argued for greater leeway in raising prices so it can offset the decline in mail volumes.
Congress has proposed and failed to pass several iterations of postal reform legislation which the Postal Service says is vital for its survival.
The Postal Service has also been hit hard by the virus’s spread. At least 600 workers have tested positive for Covid-19—the respiratory illness caused by the pathogen—6,000 are quarantined and 12 have died, according to Fredric Rolando, president of the National Association of Letter Carriers. Most have been concentrated in the New York area, among the areas that have faced some delivery disruptions.
“Everybody is scared, obviously,” Mr. Rolando said. “There’s so many challenges with our craft in terms of safety,” including entering many buildings during the day and touching countless surfaces.
Two major partners, FedEx Corp. and Amazon.com Inc., have sent fewer packages to the Postal Service as they shift toward handling more of their own local deliveries. FedEx has decided to build out its ground network to seven days a week, while Amazon has hired thousands of local drivers to deliver many of its orders.
The private delivery giants are also struggling with the health crisis as workers get sick and the companies try to manage a surge in residential deliveries ordered by homebound shoppers. Amazon is hiring 100,000 workers and said it would focus on deliveries of essential items. The federal relief package included fuel-tax relief for cargo carriers like FedEx and United Parcel Service Inc. but not enough to offset the loss of profitable business-to-business deliveries, analysts say.
The Postal Service was lobbying for more relief in the $2.2 trillion stimulus bill. The House Democrats’ proposal would have granted the Postal Service $25 billion and forgiven $11 billion in debt.
House Democrats have called for the appropriations to be included in the next stimulus package, and have also suggested including some sought-after reforms to the agency, like requiring postal workers to enroll in Medicare.
Paul Steidler, a senior fellow at the Lexington Institute think tank that advocates for limited government, says that the Postal Service should be extended loans to maintain operations during the pandemic but that any other appropriations shouldn’t come without fixing longstanding problems.
“If you do it now without structural reform, you don’t deal with the underlying issues that have led the Postal Service to have years of consecutive losses,” Mr. Steidler said. “You also eliminate some of the pressure to do that.”
Mr. Rolando, whose union represents more than 275,000 postal workers, says funding is needed to cover the anticipated revenue shortfall.
“At the end of this thing, we want to be where we were at the beginning of it financially,” Mr. Rolando said. “It’s all about getting through the crisis.”
President Trump has said the Postal Service is being taken advantage of by Amazon and online merchants who rely on the agency to deliver many packages to residents and says they should pay more money to do so.
“If they raise prices by actually a lot, then you’d find out that the post office could make money or break even,” Mr. Trump said Tuesday at a White House briefing. “But they don’t do it. And I’m trying to figure out why.”
In 2018, Mr. Trump created a task force headed by Treasury Secretary Steven Mnuchin to review the Postal Service’s operations and contracts. The task force recommended that the agency charge more for certain package deliveries and redefined the universal service obligation that requires that it deliver everywhere in the U.S., but stopped short of proposing major structural changes like privatization.
Postal Package Deliveries ‘Bogged Down’ With Delays, Backlogs
Heavy parcel volume during coronavirus lockdowns, staffing shortages are straining mail delivery networks.
Surging e-commerce volumes during the coronavirus pandemic are straining the U.S. Postal Service’s parcel network as staffing shortages and backlogs in hard-hit areas slow deliveries.
The problems have delayed some packages for days and even weeks, shippers and consumers say, holding up orders at a time when many people are shopping more online to avoid infection with the virus.
The slow deliveries have complicated business for e-commerce sellers who rely on the Postal Service to ship packages at affordable rates, and tracking services have added to the frustrations, with some items appearing to get stuck at certain locations or vanishing altogether.
“There is a whole network that is bogged down.”
— Luke Marion, co-owner of online retailer MIgardener
“Updates on locations of almost all of our packages are either not available, they do not get scanned [or are] sent back without notification,” said Ivy Kami of Colorado Springs, Colo., who sells jewelry and gifts through an online store called Boutique Alosia LLC. “Long wait times and frustrated customers have not been fun for e-commerce sellers like myself.”
Business for Luke Marion, co-owner of MIgardener, an online garden center based in Port Huron, Mich., soared after the pandemic hit, but transit times for USPS shipments to his customers in some cases doubled or even tripled in recent weeks, he said. Tracking information showed that about 30% to 40% of packages he shipped to his customers in Michigan would go out of state first, which Mr. Marion attributed to problems at a postal distribution center in Detroit.
“There is a whole network that is bogged down,” he said, “and it’s not the [mail] carriers’ fault.”
Like private delivery giants United Parcel Service Inc. and FedEx Corp., the Postal Service is coping with unexpected holiday-level package volumes as the pandemic adds to operational and financial stresses. UPS is imposing extra fees to help offset those costs, while FedEx is limiting the number of items some retailers can ship from certain locations.
Coronavirus has also taken a toll on postal workers. About 2,830 of the Postal Service’s 630,000 employees have tested positive for Covid-19, a spokeswoman said, “with some deaths.” Unions representing postal workers said this week that more than 60 workers have died.
The Postal Service is focused on keeping its employees and the public safe while they handle shipments such as medicines, supplies and benefits checks, the spokeswoman said. Those workers provide “a vital public service that is a part of this nation’s critical infrastructure.”
She said the Postal Service, like “other delivery companies, has experienced some service disruptions in a few locations domestically, including Chicago, New York and New Jersey, due to the pandemic,” and is working to “match the increased workload, including hiring based on local needs.”
The Postal Service’s on-time delivery of parcels from businesses to homes has declined in recent weeks, according to ShipMatrix Inc., a software provider that analyzes shipping data.
Between April 19 and May 23, the Postal Service delivered 68.2% of priority mail packages on time, down from 87.4% between March 1 and April 18. For first-class packages, 84.2% were delivered on time between April 19 and May 23, compared with 92.9% in the earlier period.
UPS delivered 96.5% of business-to-consumer shipments on time between April 19 and May 23, according to ShipMatrix, while FedEx Ground delivered 86.9% of such packages on time during that period.
“The parcel volumes have gone up, we are probably working at a holiday volume rate, but we’re doing it with about a 74% staffing [level],” Dwight Burnside, a mail handler at a USPS processing and distribution center in Merrifield, Va., said in a union-organized press call this week.
U.S. Postal Service Reaches Agreement on $10 Billion Coronavirus-Relief Loan
Postmaster General DeJoy says USPS ‘remains on an unsustainable path’ and that the funding ‘will delay the approaching liquidity crisis’.
The U.S. Postal Service, struggling with fallout from the coronavirus pandemic, reached an agreement for a $10 billion loan from the Treasury Department.
While the Postal Service doesn’t currently need the money, the Cares Act relief package passed by Congress in March authorizes it to borrow directly from the Treasury if necessary to fund operating expenses, the department said Wednesday.
President Trump has indicated that he planned to use the Cares Act provision as leverage to force the Postal Service to raise rates for package delivery.
Speaking to reporters in April, he called the agency “a joke” and said it was losing money on packages delivered for Amazon.com Inc. and other e-commerce firms. Mr. Trump is a longtime critic of Amazon and its chief executive, Jeff Bezos, who also owns the Washington Post.
The Postal Service has been squeezed in recent years by mounting costs and a decline in its profitable first-class mail business segment. The pandemic has deepened its financial struggles as first-class and marketing mail volumes have plunged.
At the same time, the agency has seen a sharp increase in the number of packages sent due to a boom in online shopping as people stay at home. But those shipments require higher costs to process.
The agency’s finances have also been hampered by legislation that requires it to prefund retirement benefits for employees.
Postal Service leaders have tried to rally Congress to pass legislation to remove that requirement and have asked their regulator to loosen price caps to give it more flexibility to try to solve the problems.
In a statement Wednesday, Postmaster General Louis DeJoy said the Postal Service “remains on an unsustainable path” and that the Treasury loan “will delay the approaching liquidity crisis.” Details of the loan have yet to be worked out, the Treasury said.
“I look forward to continuing to work with Postmaster General DeJoy to fulfill the President’s goal of establishing a sustainable business model under which USPS can continue to provide necessary mail service for all Americans, without shifting costs to taxpayers,” Treasury Secretary Steven Mnuchin said in a statement.
Mr. DeJoy, a North Carolina businessman and Republican donor, has taken a harder look at ways the Postal Service can cut costs and operate more efficiently.
Since starting the job last month, he has called for a closer scrutiny of overtime and transportation costs, even if it means that some mail is left behind before trucks leave, according to a memo earlier this month that was reviewed by The Wall Street Journal.
Mr. DeJoy earlier this week pointed to billions of dollars spent last year on overtime and other extra costs without a significant improvement in service levels.
“We will continue to focus on improving operational efficiency and pursuing other reforms in order to put the Postal Service on a trajectory for long-term financial stability,” he said in Wednesday’s statement.
‘Friday Night Massacre’ At US Postal Service As Postmaster General—A Major Trump Donor—Ousts Top Officials
“America is in a dead sprint to authoritarianism. The man is pulling out all the stops to prevent the citizens of this country from holding a legitimate election in which he might face removal from office.”
Government watchdogs, Democratic lawmakers, and pro-democracy advocates declared it a “Friday Night Massacre” for the U.S. Postal Service after news broke in a classic end-of-the-week dump that Louis DeJoy—a major GOP donor to President Donald Trump and the recently appointed Postmaster General—had issued a sweeping overhaul of the agency, including the ouster of top executives from key posts and the reshuffling of more than two dozen other officials and operational managers.
“Trump is actively sabotaging the election under our noses—this isn’t theoretical, it’s happening RIGHT NOW.” —Brian Tyler Cohen, political commentator
According To The Washington Post:
The shake-up came as congressional Democrats called for an investigation of DeJoy and the cost-cutting measures that have slowed mail delivery and ensnared ballots in recent primary elections.
Twenty-three postal executives were reassigned or displaced, the new organizational chart shows. Analysts say the structure centralizes power around DeJoy, a former logistics executive and major ally of President Trump, and de-emphasizes decades of institutional postal knowledge.
All told, 33 staffers included in the old postal hierarchy either kept their jobs or were reassigned in the restructuring, with five more staffers joining the leadership from other roles.
Already under fire for recent policy changes at the USPS that mail carriers from within and outside critics have denounced as a sabotage effort to undermine the Postal Service broadly as well as disrupt efforts to carry out mail-in voting for November’s election amid the Covid-19 pandemic.
The moves unveiled late Friday were viewed as an overt assault on democracy and a calculated opportunity to boost Republicans’ long-held dream of undercutting or privatizing the government-run mail service while also boosting their election prospects in the process.
“Another Friday night massacre by this administration—and this time dealing another devastating blow to our postal service,” said Rep. Mary Gay Scanlon (D-Pa.) “The American people deserve answers and we’re going to keep fighting for them.”
Scanlon was among more than 80 congressional lawmakers who sent a letter to DeJoy earlier in the day expressing “deep concerns” about operational changes he has made for mail carriers that have delayed deliveries and lowered standards.
“It is vital that the U.S. Postal Service not reduce mail delivery times, which could harm rural communities, seniors, small businesses, and millions of Americans who rely on the mail for critical letters and packages,” the letter stated. “Eliminating overtime and directing postal workers to leave mail on the floor of postal facilities will erode confidence in the Postal Service and drive customers away, resulting in even worse financial conditions in the future.”
Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, warned what occurred Friday is designed to weak the Postal Service, slow vote-by-mail, and disrupt the 2020 Census.
“DeJoy, a Trump donor with no experience inside the postal service, has been installed to cause chaos and disruption at a time when the timely delivery of mail could not be more critical.” —Kristen Clarke, Lawyers’ Committee
“We are sounding an alarm regarding personnel changes, policy shifts and service disruptions happening inside the U.S. Postal Service on Louis DeJoy’s watch,” Clarke said in a statement. “The postal service lies at the heart of our democracy and is critical to the success of an unprecedented vote-by-mail system that is needed for a fair and effective 2020 election season.
The postal service helps ensure that our nation’s most vulnerable communities are receiving medications and resources during the pandemic. It is also critical to the efforts to achieve a full and accurate 2020 Census.”
Clarke said the administration’s intentions are clear: “DeJoy, a Trump donor with no experience inside the postal service, has been installed to cause chaos and disruption at a time when the timely delivery of mail could not be more critical.”
As Common Dreams reported earlier Friday, Sen. Elizabeth Warren was among those who signed the letter and also called for DeJoy’s efforts to be investigated by the Inspector General of the USPS. Since 2016 alone, DeJoy has donated more than $2.5 million to the Republican Party and candidates. In 2020, prior to his appointment as Postmaster General by the GOP-controlled board of governors, DeJoy had already given approximately $360,000 to a Super PAC supporting Trump’s reelection.
As the Post notes in its reporting, the reshuffling of top managers and executives—as well as a hiring freeze and push for early retirements—”worried postal analysts, who say the tone of DeJoy’s first eight weeks and his restructuring have recast the nation’s mail service as a for-profit arm of the government, rather than an essential service.”
In a video posted to Twitter, Rep. Peter DeFazio (D-Oreg.) characterized DeJoy as a “political crony” of the president’s and also denounced the brazen efforts now on display as a “Friday Night Massacre” scenario:
Trump’s political crony managing the #USPS has made significant changes to postal operations, which has already slowed mail delivery across the country. Tonight he went further and executed a Friday night massacre— firing USPS managers who run the day to day postal operations. pic.twitter.com/YbPrQJcPVE
— Peter DeFazio (@DeFazio4Oregon) August 8, 2020
Appearing Friday afternoon on Capitol Hill, DeJoy brushed off accusations that he is acting as a political bag man for Trump. “While I certainly have a good relationship with the president of the United States, the notion that I would ever make decisions concerning the Postal Service at the direction of the president or anyone else in the administration is wholly off-base,” DeJoy said.
But outside critics like Walter Shaub, former head of the Office of Government Ethics and a fierce critic of Trump’s behavior as president, said the latest move should be seen as nothing less than a direct effort by DeJoy to exploit his authority at the Postal Service to further the president’s political interests and reelection prospects.
America is in a dead sprint to authoritarianism. The man is pulling out all the stops to prevent the citizens of this country from holding a legitimate election in which he might face removal from office. https://t.co/leWoXL15fe
— Walter Shaub (@waltshaub) August 8, 2020
According to Brian Tyler Cohen, a liberal commentator and podcast host, “Congressional Democrats need to do something about this” immediately.
“If we wait until October/November, it’ll be too late,” said Cohen. “Trump is actively sabotaging the election under our noses—this isn’t theoretical, it’s happening RIGHT NOW.” Cohen said this situation should be treated like a “fucking five-alarm fire” and said action must be taken by both lawmakers and the U.S. public without delay.
Grind the government to a fucking halt if we have to. I can’t stress this enough— if the USPS is sabotaged, this will amount to the greatest voter suppression campaign in history. The election will effectively become void… AND THAT IS WHAT TRUMP WANTS— THAT IS HIS POINT HERE.
— Brian Tyler Cohen (@briantylercohen) August 8, 2020
Rep. Gerald E. Connolly (D-Va.), chair of the House subcommittee which has oversight for the USPS, said what DeJoy is trying to pass off as simple organizational restructuring is actually “a Trojan Horse” designed to destroy one of the nation’s most trusted and valued institutions from within.
Connolly on Friday night called it, “Deliberate sabotage to disrupt mail service on the eve of the election—an election that hinges on mail-in ballots.”
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