In the fiscal year 2024, the U.S. Postal Service (USPS) reported a substantial rise in its net losses, with figures climbing from $6.5 billion to $9.5 billion, according to a statement released on November 14. Despite an uptick in revenue from $78.18 billion to $79.53 billion, this increase was starkly contrasted by a decline in mail volumes, which fell from 116 billion pieces to 112 billion. The USPS Office of the Inspector General has noted that the agency relies heavily on postage revenue to cover its operational costs. Interestingly, this significant financial downturn came despite USPS increasing postal rates in January and July as part of its long-term strategy called the Delivering for America (DFA) plan. This 10-year plan aims to stabilize the USPS’s financial standing, yet the expected benefits have been overshadowed by the continued decline in mail volumes.
The $3 billion increase in losses has spurred criticism of the DFA plan by advocacy groups like Keep US Posted. According to former Congressman Kevin Yoder, who now serves as the executive director of the organization, the losses were exacerbated by DeJoy’s leadership and the agency’s focus on increasing postage costs and prioritizing package deliveries at the expense of traditional mail services. He argues that while package volumes have risen, they have not compensated for the losses incurred from declining mail volumes, which still represent the largest revenue source for the USPS. Consequently, Yoder and others emphasize that frequent postage hikes have contributed to further mail volume decreases, worsening the financial situation.
USPS Chief Financial Officer Joseph Corbett has defended the agency’s strategies, indicating that falling mail volumes and rising package volumes underscore the need to fully advance the DFA plan. This strategy has reportedly led to reduced work hours over three years, yielding annual savings of approximately $2.3 billion. However, the ongoing rate hikes, which USPS claims are essential for financial stability, have been met with backlash. When the Postal Regulatory Commission approved the price increases, the USPS maintained that its rates remained among the most affordable globally, despite growing concerns among lawmakers and stakeholders about the sustainability of such hikes.
In a letter written by a group of concerned senators, the impact of these postage increases was labeled as “unsustainable.” They pointed to significant drops in mail volumes and highlighted a correlation between rising prices and increased financial losses for the USPS. Rep. Jake LaTurner (R-Kan.) further criticized the situation, noting that multiple price increases since August 2021 have resulted in decreased demand for traditional mail, which remains a critical revenue source for the agency. His proposed legislation, the USPS SERVES US Act, aims to give the Postal Regulatory Commission more authority to mitigate the detrimental effects of the DFA plan.
While USPS plans to raise shipping service prices starting January 19, the agency has stated that it would not change prices for Mailing Services, indicating that First-Class stamp prices would remain stable. This pause in stamp price increases comes in the face of widespread criticism, as ongoing hikes have adversely impacted various sectors, including businesses and nonprofit mailers. Critics believe that these consistent increases threaten not only the financial health of the USPS but also the overall accessibility of postal services for American consumers.
Ultimately, the USPS is at a critical juncture characterized by rising operational costs, diminishing mail volumes, and legislative scrutiny. The current trajectory raises questions about the long-term viability of traditional postal services in the face of necessary financial adjustments. While USPS management maintains that its strategies, including pricing and operational adjustments under the DFA, are moving the agency toward greater market stability, skepticism remains among lawmakers and advocacy groups about whether these initiatives can effectively address the underlying issues facing the postal system.