Everyone felt a bit of relief on September 20 when the Postal Service announced it wouldn’t be raising rates next January. In the official quote included in the announcement, Postmaster General Louis DeJoy stated that “Our strategies are working, and projected inflation is declining,” and that, as a result, eliminating the January increase was possible.
While the elimination of the price hike was the intended focus for ratepayers, anyone reading more closely might have found DeJoy’s brief explanation somewhat bewildering.
Even discounting that his statement was contrived by the agency’s PR spinmeisters for consumption by the credulous general media, DeJoy’s allegation that “our strategies are working” flies in the face of reality.
The CPI
Using the CPI figures released monthly by the Bureau of Labor Statistics – the numbers used to calculate USPS pricing authority – the trend is consistently upward; since September 2022, the CPI has increased in 19 out of 24 months, climbing 6.06% over the period.
(Regardless, the current ratemaking regime provides the Postal Service with rate authority linked to inflation (through the CPI) so, if the agency keeps its costs under control, the impact of inflation should be largely offset.)
The Plan
In his original 10-Year Plan, based on information from undisclosed sources, DeJoy asserted that his measures would result in a $1.7 billion surplus in FY 2024, compared to an estimated $13.1 billion loss without them. However, in the Fiscal Year 2024 Integrated Financial Plan, released November 20, 2023, the estimated outcome for the fiscal year had fallen $8 billion, to a $6.3 billion loss. Inflation, apparently inadequately anticipated by The Plan, was blamed. However, as of the August data, the Postal Service is careening toward a loss of over $9 billion for the fiscal year (that ended a week ago), well above the $6.3 billion projected in the IFP and about $11 billion worse than what DeJoy had predicted in his 10-Year Plan. Aside from the Plan’s underestimating inflation, how such an outlook testifies to The Plan’s strategies working is hard to understand, to say the least.
Service
Meanwhile, service performance remains sub-par. Though some districts do better than others, the national service scores have yet to reach any of the FY 2024 targets.
Through the end of June (the end of Postal Quarter III), overnight and 2-day service for First-Class Mail were 1.6 and 3.8 percentage points, respectively, below the 95% target. The scores for 3-, 4-, and 5-day service fell short by 7.1, 5.5, and 12.1 percentage points, respectively, from the 93% target. At the district level, so far in fiscal 2024, only 18 of the 50 districts have met the overnight target while, at the other end, none of them have hit the target for 5-day service.
Marketing Mail letters overall have barely beaten the 94.62% target, primarily because so much of that volume is drop-shipped close to destination, but overall flats and overall carrier routes remain below the target. Periodical scores remain in the low 80s despite a target of 87.29%.
DeJoy has pared air transportation, trimmed networks, optimized “full trucks,” and cut afternoon collections. It’s difficult to square the service performance resulting from those Plan measures with his boast that the Plan’s “strategies are working,” unless poorer service is the goal.
Observations
As with any enterprise, it’s the job of the Postal Service’s PR function to offer information and statements that emphasize what’s good, ignore what isn’t, and place their client – in this case DeJoy and his Plan – in the most favorable light. However, that only works if there’s credibility to the message or, conversely, if the message isn’t refutable by ample evidence. So ratepayers may appreciate the break on prices but also know better about what’s working – or not.
If you're on this page, it's likely because you have challenges to find solutions for or a question to answer. Fortunately, you've come to the right place. Click below to download our 2023 Services brochure to learn just how much we have to offer. Leave your name and email if you'd like us to stay in touch.Â
The brochure is a PDF that will open in a new browser window. Download, read, share, and let us know if you have questions.