United States Postal Service Hanging on a Thread

The United States Postal Service like many other companies has been feeling the heat of COVID-19, which probably explains why you‘re getting lesser mail than ever. It also explains the many scary headlines that your favorite mail delivery and package service will soon run out of business.

Since the virus attacked the US, more and more businesses haveditched mail advertisements resulting in “reduced mail volume,” according to Rep. Gerry Connolly, D-Va.

The representative predicts the dip in mail volumes could steer towards 60 percent and cause serious problems to the shipping service.

So when did the rain start falling on us and who should take responsibility to get things in check?

Let’s Not Forget the Critical role of the USPS

A trip down memory lane, 50 years back when a strike by postal workers froze mail delivery operations should remind us the critical role of the United States Postal Service.

Hundreds of thousands of mail carriers all over the US held aweeklong protest disrupting the flow of mail.

The strike pushedPresident Richard Nixon to declare the disruption a countrywide emergency and sent in the National Guard transport the mail. 

“The USPS is a critical element of our entire communication system. The less fortunaterely heavily on it for government aid and medical services,” President Nixon told Americans. “Veterans alsouse it for their compensation checks. People of ageuse it for Social Security checks.” 

This is not any different in our days, when the United States Postal Service stills transports nearly 1 million important prescriptionsper year and it remains thestaple delivery route to US citizens in remote areas.

It also partners with companies like the United Postal Service to enable over $1.5 trillion in sales. Plus it is the obvious best choice to reach out to citizens if this year’s census will come to happen.

As it stands, USPS is operating at a “negative net worth of 65 billion USD plus a further 140 billion USD in unfunded liabilities.” And without government intercession, the USPS may be insolvent by next year.

The situation is getting realer as coronavirus takes everything under siege. US citizens are no longer using mail and analysis has it that USPS may shut down in a month or so.

Not Enough support:  Fingers Pointed at the Trump Admin

The government might have set aside10 billion USD incredit for the USPS through the March 2 Trillion USD emergency billbut that wasn’t enough support according to Rep. Gerry Connolly, D-Va.

Connolly who refers to the USPS as“insolvent" says the mail delivery service needs loan leniency and not further credit which could inspire an endless cycle of debt. “What the Postal Service needs right now is an injection of funding,” he says.

Finances have been a mess in the United States Postal Service for some time, partly because of a policy that mandates the firm to fund in advance its future staff retirement benefits—which cost the firm more than 8.5 billion USD in its previous financial year.

Mark Dimondstein, boss of the American Postal Workers Union feels the government is not doing enough to support USPS even though delivery services have proven essential amid Coronavirus.

"Think of it: Amid coronavirus, info on health should reach different households. Medicines are being transported intohouses from the USPS. Even before Corona, the firm handled over1 billion prescription packages.” Says Dimondstein.

The Union’s president sees the loan terms in the latest emergency bill as a plot—by the current government—to take over the United States Postal Service.

“President Trump’s admin has now made it clear it intends to turn the USPS into a private agency. Everything is plotted in their plan."Dimondsteinconfirms.

According to him, under the new plan, your democratic right to enjoy postal services, regardless ofwho you are and your location, would vanish or dwindle significantly.

A Shutdown Is Possible, In the Worst-Case Scenario

Last month President Donald Trump made a claim that the USPS would not be in financial distress if it charged a higher shipping fee to send parcels for ecommerce companies.

This claim was wrong and has been discredited by the facts froma podcast that featured in NPR.org. Here is a summary of the discussion as it rolls out in the the podcast.

Fact Check: Is The USPS Making Losses By Transporting Packages For Amazon?

Host:  MARY LOUISE KELLY

KELLY: President Trump has continued to attack the USPS and Amazon saying the former is“playing Amazon's delivery boy" and insinuating that the ecommerce merchant has been enjoying a lucrative deal to get packages sent to shoppers. Speaking in a meeting at Whitehouse, here’s what the president said;

(Record of The President’s Voice at the meeting)

PRESIDENT TRUMP: The post office is losing billions of dollars, and the taxpayers are paying for that money because it delivers packages for Amazon at a very below cost.

KELLY: NPR's Brian Naylor analyzes the claim and disputes the allegations

BRIAN NAYLOR, BYLINE: The United States Postal Servicetransports approximately 40 percent of Amazon packages. And though we don't know Amazon pays per package, the charges are less than what you spend towhen sending a parcel to you Aunt partly because they have a special arrangement and slightlydifferent logistics.

MICHAEL PLUNKETT: When Amazon hands a package over to the Postal Service, they're doing it very close to its destination, and it's ready to be handed over directly to the carrier who's going to deliver it, unlike when you or I take a package into our local post office.

NAYLOR: That's Michael Plunkett, who was a vice president at the Postal Service and now leads PostCom, an association of large mailers.

Plunkett says no one really knows what kind of deal Amazon made with the Postal Service because the details are sealed. But he says contrary to what the president tweeted - that they lose a fortune - the Postal Service does not lose money delivering Amazon's or anyone else's packages.

PLUNKETT: The Postal Regulatory Commission does review the Postal Service's contracts, and they've concluded the opposite - that the Postal Service does make money from its shipping contracts.

NAYLOR: Plunkett says the Postal Service's deal with Amazon is probably unlike what it has arranged with other shippers.

PLUNKETT: Amazon probably looks very different from the rest of the Postal Service's shipping business because they have enough volume in their own network of distribution centers, so the vast majority of their packages are being entered locally, and they're very cost-efficient for the Postal Service to handle for the most part.

NAYLOR: In fact, package deliveries have been the bright spot in the Postal Service's financial picture the last several years. It reported more than $19 billion of revenue from package deliveries last year - an increase of 11 percent.

Still, that wasn't enough to put the mail delivery and package service into the black. In part, that's because fewer people are mailing first-class letters and bills. The Postal Service lost some $2.7 billion last year. Democratic Senator Tom Carper of Delaware says there's another reason for the red ink - something few, if any, other businesses have to deal with.

TOM CARPER: The other thing that's hurting the Postal Service's bottom line is a requirement to pay off, over a 10-year period of time, health care costs for their pensioners. That's what's really choking the Postal Service - that and the decline in first-class mail.

NAYLOR: Carper and other lawmakers have proposed allowing the Postal Service to pay its future retirees health benefits over a 40-year period, rather than 10 years, and to shift retirees onto Medicare. If the president wants to have a say in postal matters, there's one thing he could do, Carper says. Appoint some members to the Postal Board of Governors.

CARPER: There are no folks on the Postal Board of Governors now who come from outside the Postal Service. And this is like, imagine one of the two or three largest companies in America not having a board of directors. It would be unheard of. Well, that's essentially where the Postal Service is.

NAYLOR: There are three nominations to the board pending, but even if they were confirmed, the board would still be short of a quorum needed to meet.

Brian Naylor, NPR News, Washington.

To wrap up

The above discussion from NPR.org lends credence to Mark Dimondstein story. It is evident that the Trump admin is neglecting the situation at the USPS.

This continues despite the concerns United States Postal Serviceexpressed through is spokesperson;

"The USPS appreciates the inclusion of limited emergency borrowing authority during this COVID-19 pandemic. However, the Postal Service remains concerned that this measure will be insufficient to enable the Postal Service to withstand the significant downturn in our business that could directly result from the pandemic. Under a worst case scenario, such downturn could result in the Postal Service having insufficient liquidity to continue operations."

That is to say the mail delivery service may soon run out of liquidity and shut down operations.