After the end of its fiscal year, the United States Postal Service (USPS) reports its results to Congress. Given the impact that the USPS’s performance has on many segments of the printing market, it is worth noting what is said.
Postal Service Reform Act of 2022
On the USPS website, you might notice that every press release includes the following line:
The Postal Service generally receives no tax dollars for operating expenses and relies on the sale of postage, products, and services to fund its operations.
This is meant to remind us that while postal delivery is a service that the government provides to its citizens, it is not free of charge. Although the government expects the Postal Service to be self-supporting, it has not always made it easy for the Postal Service to do so. This year, the single biggest reason for financial improvement in the USPS budget can be traced back to the Postal Service Reform Act of 2022. This bill, which passed with bi-partisan support and was signed into law by President Biden in April, addresses the USPS’s finances and operations. From a financial perspective, the key item is that the bill repeals the requirement that the USPS annually prepay future retirement health benefits. This had an immediate and significant impact in that it provided a one-time, non-cash benefit of $57 billion. The release from the requirement to prepay benefits has hung over the USPS for years and made it very difficult for the USPS to break even.
Two other items from the Postal Service Reform Act stand out as being important to printers and mailers:
- The USPS must develop and maintain a publicly available dashboard to track service performance and must report regularly on its operations and financial condition.
- The USPS must continue to provide mail delivery six days a week.
The Status of the “Delivering for America” Plan
Reaching a budget break-even point is one goal of the USPS’s Delivering for America plan, which was announced in March of 2021. The plan contains a ten-year vision for transforming the USPS while achieving financial sustainability and still providing excellent service and reliability. The plan as envisioned would reverse a projected $160 billion in financial losses through a combination of legislative and administrative actions, one important aspect of which is implementation of improvements in mail processing, transportation, retail, delivery, and administrative operations. The plan also includes initiatives to grow revenue and introduce new products.
Perhaps the most visible—and controversial—aspect of the Delivering for America Plan is the work to consolidate and automate mail centers. The USPS reports that it has installed 131 of 137 new package sorting machines ahead of the holiday mailing and shipping season. It has recently installed new package sorting machines in Aurora, Illinois; Albany, New York; Flagstaff, Arizona; Freehold, New Jersey; and Hyattsville, Maryland. These installations bring the total of new processing machines to 249 since March of 2021 when the Delivering for America plan was launched. They are part of a $40 billion investment. The USPS expects that this equipment, combined with increased operational precision, will expand the USPS’s daily package processing capacity to 60 million.