Postmaster General Urges Revenue Growth for Sustainable USPS Future

The U.S. Postal Service (USPS) is facing significant financial challenges that cannot be resolved solely through budget cuts, according to Postmaster General David Steiner. During a meeting of the Postal Board of Governors in Washington on March 15, 2024, Steiner emphasized the need for the agency, which has been serving the nation for 150 years, to expand its revenue sources to achieve financial stability.

Steiner highlighted the USPS’s legal obligation to deliver to every address in the country as a potential avenue for growth. He suggested that enhancing partnerships with various customers to provide last-mile delivery services could be a key strategy. This segment of delivery, which is often the most costly and labor-intensive, presents an opportunity for the postal service to increase its revenue.

“I’ve taken to saying that we cannot cost-cut our way to prosperity,” Steiner stated. “We have to grow.”

In recent discussions, the USPS has been negotiating with private parcel delivery services such as UPS to broaden its last-mile delivery offerings. Steiner noted that the agency aims to extend these services to both large and small retailers, allowing for same-day and next-day deliveries. “The desire for fast, reliable and affordable delivery is certainly strong among all retailers,” he added.

Despite a reported operating revenue of $80.5 billion, an increase of $916 million from the previous fiscal year, the USPS continues to face substantial net losses totaling $9 billion. This figure marks a slight improvement from the $9.5 billion loss recorded last year.

During the same meeting, Amber McReynolds, who was re-elected as chair of the Postal Board of Governors, pointed to “long-standing and unnecessary restrictions” that hinder the USPS’s financial performance. She stressed the urgent need for both executive and legislative reforms to ensure the postal service’s long-term sustainability.

McReynolds noted that the USPS is required to make disproportionate contributions to its retiree system compared to other federal agencies. Additionally, the postal service is limited in its investment options, as it can only allocate retirement funds into treasury securities, missing out on potentially lucrative opportunities in a diversified portfolio.

Calls for reform extend to the USPS’s pricing system, workers’ compensation program, and borrowing limits, which have not been updated since 1991. “This is urgent and it is time for action,” McReynolds stated.

Steiner, who took over as postmaster general in July 2023 and has previously served on the board of FedEx, underscored the need for innovation within the USPS, including the potential integration of artificial intelligence into its logistics network. He stressed that capital is essential for implementing these improvements.

To this end, Steiner confirmed that he plans to adhere to the existing $40 billion, ten-year modernization and financial stabilization plan established by his predecessor, Louis DeJoy. He noted that progress has already been made, with on-time mail delivery showing steady improvement and most customers receiving their mail and packages within three days.

As the busy holiday season approaches, Steiner expressed confidence in the postal service’s readiness, attributing this to $20 billion invested over the past four years in enhancing mail processing and logistics. With a stabilized workforce, the USPS anticipates needing only around 14,000 seasonal employees this year.

Concerns regarding the potential privatization of the postal service were raised by members of the public during the meeting. McReynolds reaffirmed that there are currently “no proposals or plans to privatize the postal service.” She emphasized that both the new postmaster general and the board share a commitment to maintaining the USPS as a public entity.

As the postal service navigates its financial hurdles, the focus remains on leveraging its vast delivery network and exploring new partnerships to ensure a sustainable future.