Postmaster General Delays Changes to Postal Service, Which Is Good News for Retailers
U.S. Postmaster General Louis DeJoy, who was appointed to the position in June and tasked with returning the U.S. Postal Service to profitability, is reversing course amid scrutiny of his cost-cutting measures.
Democratic party leaders have accused DeJoy, a political donor to President Donald Trump, of slowing down postal deliveries in order to impede mail-in voting for the upcoming general election in November. And a number of Democratic state attorneys general were reportedly planning to file legal action against the Trump Administration for those purported efforts.
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However, today DeJoy announced in a statement that he will delay his reforms to the Postal Service until after the election and halt previous efforts already underway. “To avoid even the appearance of any impact on election mail, I am suspending these initiatives until after the election is concluded,” he said.
Specifically, in response to prior criticisms, he noted that post office retail hours will remain unchanged, no processing facilities will be closed and collection boxes will remain in place. And worker overtime hours will continue to be approved “as needed.”
In addition to its effect on voter turnout, the USPS’ proposed reductions in mail services also would have had a hugely detrimental impact on the retail industry, which is increasingly reliant on e-commerce sales channels.
Recently, Adobe’s Digital Economy Index reported that the total online spend during the pandemic has increased by $94 billion, amounting to $434.5 billion spent in the first seven months of this year. Even in July, when most states had lifted their restrictions to again allow in-store shopping, e-commerce saw a 55% sales increase year-over-year.
“The fact that even while states are starting to open up, the numbers remain so much higher than typical proves that things will never really go back to ‘normal,’” said John Copeland, VP of marketing and customer insights at Adobe. “E-commerce is more embedded into our lives than it has ever been before, and that is irreversible.”
The National Retail Federation emphasized the importance of the U.S. Postal Service in a May letter to Congress, urging lawmakers to include funding for the Postal Service in its next stimulus package. “Retailers of all sizes are relying on USPS to deliver goods to consumers in every zip code across America, especially as online sales increase.” It added that small businesses are particularly dependent on the USPS — a sector of the economy that is already struggling during the current recession.
However, the Postmaster’s message today does not address the proposed holiday price hike for parcel shipping, which the USPS announced late last week. The temporary price increase would be in effect from Oct. 18-Dec. 27 and would apply to all commercial domestic parcel shipping, including Priority Mail Express, Priority Mail, First-Class Package Service, Parcel Select and Parcel Return Service.
According to some estimates, a 1-pound parcel rate for the agency’s Parcel Select DDU drop-shipping service would rise by about 7.5%, from $3.19 to $3.43 per parcel. The rate for a returned parcel of the same weight would rise 7.9%. Those increases would initially hit major commercial shipping companies, who could likely pass that along to their clients: small and midsize merchants.
President Trump has been critical of the USPS for several years: In April 2018, he ordered a review of the Post Office’s finances by a task force led by the Treasury Department. “A number of factors, including the steep decline in First-Class Mail volume, coupled with legal mandates that compel the U.S.P.S. to incur substantial and inflexible costs, have resulted in a structural deficit,” Trump stated in the order. “The U.S.P.S. is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout.”
The task force’s report, released later that year, proposed that the Postal Service ramp up shipping costs for certain packages — a move that some insiders argued was specifically targeted at Amazon, a company President Trump has repeatedly criticized, which some have attributed to the fact that its founder Jeff Bezos also owns The Washington Post.
It’s estimated that the USPS lost about $78 billion from fiscal years 2007 through 2019, according to the Government Accountability Office, a nonpartisan watchdog group. That was due primarily to declining mail volumes and increased operating costs.
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