At the start of July, the U.S. officially initiated sweeping changes for postage rates on small packages arriving from outside the country. The move comes as a result of the deal struck last September at the Universal Postal Union (UPU) convention, in which White House lead negotiator Dr. Peter Navarro effectively eliminated a market distorting regime that had long out-stayed its original purpose of stimulating delivery of goods from “developing countries” like China.
Up until this month, sellers from abroad were granted access to cheaper rates to ship their items to the U.S. than for the same size products to travel within the U.S. In order to generate momentum for reform on this issue, our organization petitioned Postal regulators on numerous occasions, citing the immense competitive advantages that were regularly exercised by international sellers.
Through the USPS, these producers ultimately had the ability to undercut American companies on market pricing thanks to the shipping savings that they were able to accrue. Due to the administration’s achievements, the Postal Service is able pull down such a discriminatory cost structure and the agency is also genuinely more equipped to support the engines of commerce within the U.S.
While the international shipping changes reflect one measure of success to support the economy and allow the USPS to bring in more shipping revenue, it is apparent that regulators, lawmakers, and postal leaders need to continue the momentum for more meaningful solutions. After applying many ill-conceived business practices for more than a decade, USPS’s unfunded liabilities and debt total approximately $161 billion, according to the Government Accountability Office.
This summer as challenges of COVID-19 have dragged on and the agency’s leadership transitions to new Postmaster General Louis DeJoy, the USPS faces numerous catalysts for change. DeJoy’s previous strategic roles with XPO Logistics exudes the level of business acumen to assess the Postal Service’s deepest flaws while capitalizing operational changes to meet burgeoning eCommerce demand.
When the impacts of the pandemic came about Frontiers of Freedom outlined several key prospects for systemic change. Each concept continues to be supported by USPS’ latest fiscal results and stands to put the organization on path to operating in a manner that is consistent with traditional sustainable businesses.
First, in the immediate term, the Postal Service needs to holistically reassess internal operational matters that have either failed to deliver value, or have proven wasteful due to duplicative application or situational inefficiency. A litany of concerns surround the USPS in its management of thousands of facilities, protocols and compliance for contractors, use of scheduler tools, equipment purchasing, postage reselling, etc. If resolved properly, the organization would be projected to save at least $3.2 billion annually.
Then as matter of adapting to rapidly changing consumer preferences, the Postal Service should be compelled to adopt an ‘open book’ accounting regime in which it is more fully transparent. Contrary to the USPS’ claims of an imminent collapse, Congressional leaders have observed that the agency started the COVID crisis with $9.2 billion in cash, which grew to $13.2 billion in June. While making more money is a positive trend for the Postal Service, its confounding that USPS cannot get away from regularly posting net losses. Lawmakers and regulators simply need the right tools to identify its high operational costs and assess what a reasonable pricing system looks like.
Until these changes happen the Postal Service will only descend further into a state of chaos, which could jeopardize its ability to serve all of our communities and keep all parts of the nation’s economy connected.