- 10-year plan put forward by Postmaster Louis DeJoy would result in changes such as longer delivery times and higher postage prices at the United States Postal Service
- Proposal also includes $40 billion in capital improvements and several new business solutions
- Changes aim to make USPS profitable in the near future, but critics say they will harm small businesses
Summary by Dirk Langeveld
A 10-year plan for the United States Postal Service put forward by Postmaster Louis DeJoy includes several provisions seeking to expand business mail solutions. However, the plan has also been criticized for its anticipated slowdown in first-class mail service, higher prices, and reduced post office hours in some areas.
The Delivering for America plan says changes are needed at the USPS to remain solvent, as it has operated at a cumulative loss of $87 billion over the past 14 years. The plan calls for several reforms, ranging from postal worker health plans to changes in mail delivery methods, and projects a net positive income by the 2023 or 2024 fiscal year. The plan also includes $40 billion in capital improvements including upgrades to facilities, postal vehicles, and technology.
Here’s a look at how the plan could affect business mail:
Delivery times and service
For first-class mail, the majority of which comes from businesses, about 70 percent of deliveries would continue to meet the current three-day standard. For the remaining 30 percent, delivery could be slowed up to five days.
This would primarily affect longer-haul deliveries, which currently rely on airplanes. Under DeJoy’s proposal, these deliveries would be made by truck instead.
The plan says mail has shifted to more package deliveries, and that this trend is expected to continue following the growth in e-commerce fueled by the COVID-19 pandemic. To meet this demand, the USPS looks to open 45 package sorting annexes nationwide and replace equipment as needed with package processing machines.
DeJoy also acknowledged that the plan involves reducing hours at some post offices and closing some city stations, but told Congress that this would affect only a “small percentage” of locations.
Pricing
The plan hints at pricing increases, but doesn’t give specific figures. It anticipates that $44 billion will be generated by regulatory changes including “pricing flexibility for market dominant products” and that the strategy will involve “effectively aligning prices to the marketplace for our competitive products.”
According to the Washington Post, a regulatory ruling allows the USPS to hike pricing as much as 9 percent. For companies generating large amounts of mail, this could force them to pass on the costs to the consumer or take other steps such as shifting to paperless options.
Business-specific services
The plan cites a demand for more efficient shipping options in local communities, especially as consumers have shown more support to local businesses during the COVID-19 pandemic. In addition, the USPS is frequently the carrier of choice for businesses with 10 or fewer employees due to its cost and reliability.
DeJoy is looking to expand business mail solutions to include local drop points for same-day or next-day delivery, a range of delivery options for national shipping, a more convenient returns process, improved product tracking, an e-commerce marketplace where participating businesses get a branded online storefront, and various other promotional USPS partnerships.
The plan also calls for a strategic distribution center network to guarantee one- or two-day delivery for high-volume shippers. DeJoy says the centers would allow businesses to reach 90 percent of the population in the contiguous United States within one day and 95 percent of the population within two days.
Criticism
Nydia M. Velázquez, chairman of the House Small Business Committee, joined nine fellow Democratic committee members in a letter opposing the plan. Velázquez said the plan will have “severe implications” for small businesses that rely on the USPS for deliveries, including delayed shipments, weaker consumer confidence, and diminished bottom lines.
The letter says that while business owners could shift to private delivery services for their mail, the USPS is still mandated to provide “last mile” delivery in rural areas. It says this would result in the USPS losing its most profitable customers while still having to provide its most unprofitable service.
“In effect, these policies that are aimed to cut costs and increase efficiency could result in precisely the opposite,” the representatives state.
