April 24, 2020

->In Spite of Rumors and Innuendos

The United States Postal Service is doing quite well, given the circumstances.  It is in no danger of curtailing or shutting down.  The Postal Service is not reducing its services, except in very limited cases of inadequate employee availability and exposure in a processing plant to the coronavirus.

In particular locations, the USPS has sped up its hiring processes similar to it does during annual peak season before the holidays.

The Postal Service is keeping a daily count of the number of carrier routes that are not delivered because of employee unavailability.  Those not delivered for three days, two days, and one day are tracked.  Lately, the number of non-delivered routes has dropped dramatically to negligible levels.  At USPS, it is very true that what gets measured gets managed.  And postal management tells us that rumors that it is purposely skipping delivery days are untrue.

Some nonprofit mail has been temporarily delayed.  A member of the Alliance found that its mail to Michigan was not being delivered during the promised window.  On further research, the mailer learned that the Metroplex postal plant outside Detroit was hit hard with Covid. They have had a lot of employees out and even closed it for a couple of days. The Postal Service told our member that the employees are starting to come back now and they are working on catching up.

Postmaster General Megan Brennan told us recently that USPS now has enough liquidity to last at least until next April 2021, assuming it uses the new $10 billion line of credit.  At the end of March it had $9.852 billion in the Postal Service Fund, up from $9.264 billion at the end of February, according to the Monthly Statement of the Public Debt (page 12).   In April, the Postal Service took down another $3 billion in borrowing, bringing it to $14 billion, and received an additional $10 billion line of credit from CARES.

The Washington Post reported yesterday that the Treasury might be considering adding onerous conditions on the USPS use of the new $10 billion CARES borrowing line.  These might include influencing the choice of the next Postmaster General, labor negotiations, and package pricing for Amazon and others.

The President confirmed today during a media session that he will not approve further emergency aid for USPS until they raise package prices.

The Postal Service has requested an $89 billion package:  $25 billion cash to cover potential losses, $25 billion cash to spend on new trucks and other infrastructure, $25 billion in new borrowing authority, and forgiveness of the current $14 billion in debt to the Treasury.  No aid for USPS was included in the bill signed today by the President.

While asking for $89 billion, the USPS has not provided much actual data on the net financial impact of the crisis.  It has made projections of large losses to come, and noted large volume impacts.  But nothing, for example, on how much the boom in packages has offset the loss in mail volume.

We expect the political process to play out in the coming weeks, while the Postal Service continues to provide the best service possible and maintain enough liquidity.  The rhetoric has become louder and more partisan than we are used to in the mailing world.  Usually, the refrain is that politicians do not pay enough attention to the Postal Service.   It’s now seeming like a case of be careful what you wish for!

The latest USPS volume changes from the same period last year:

Mail                                          -26.4%

Packages                                  +53%

Single Piece First Class         -11.5%

Presort First Class                  -1.1%

Marketing Mail                      -45.4%

Flats                                         -36.5%

Periodicals                              -45.2%

We have heard that many nonprofit mailers are not reducing their volumes, and some are increasing.  This makes a lot of sense for several reasons.  There is an outpouring of support for nonprofits during the crisis, especially those who either have something to offer directly, and/or those who have a relationship with the recipient.  Face-to-face fundraising and membership events have been stopped, but the mail channel remains open.  And the decline in commercial Marketing Mail means nonprofit mail stands out more in the mailbox, with most people home to read it.

We will keep pressing USPS officials to release data on nonprofit mail volume, both Marketing Mail and Periodicals, and will share it with our members when they do.  Their official quarterly financial reports for January-March 2020 will be released at the Board of Governors meeting on May 8, but there’s a chance we will get to see something sooner.  And the real impact will be seen in April, more so than March data.

We will finish with a cartoon from 1969, featuring Postmaster General Winton ‘Red’ Blount who took a very public approach to promoting needed postal reform, leading to President Nixon signing the Postal Reorganization Act of 1970.