Amid ongoing financial challenges, the USPS shows signs of positive progress

While the United States Postal Service (USPS) has seen what could be viewed as mixed fiscal year 2023 earnings results, in that it in February it reported 1.0% operating revenue gain and a $1.0 billion net loss, a trio of parcel experts told LM that the organizations is making inroads

These inroads come on the heels of its "Delivering for America 10-Year Strategic Plan” that was rolled out in March 2021 and focused on achieving financial sustainability and service excellence, in order to meet customer and business needs. The plan takes an ambitious approach focused on helping the USPS get on solid financial footing, as the organization has been in the red over the last 15-plus years.

John Haber, chief strategy officer for transportation and logistics services provider Transportation Insight, said that the USPS’s 10-year strategic plan serves as a roadmap to help guide its delivery performance, technology, and workforce to meet the constantly changing buying characteristics of both consumers and companies.

“It shows USPS as both comprehensive and ambitious with respect to service standards, delivery offerings, dynamic pricing, technology, capital investments, and the stabilization of the workforce,” he explained. “The most recent comparative tracks demonstrate significant gains within a variety of these categories compared to 2021. For example, average first-class mail and package delivery is 2.5 days. When comparing on time deliveries against service standards in 2022 vs. 2021, first class mail/packages stand at 91% vs 82.7%.

And entering the 2022 peak season post COVID, Haber said the outlook was clouded with recession fears, higher interest rates, and uncertainty to consumer buyer power and attitudes.

“Yet, USPS has demonstrated progress and determination against their Plan but will need to remain resilient to stay on path. There has been improvement made within the Postal Service Reform Act as it requires the Office of Personnel Management to enroll in Medicare when eligible. It is an important step for USPS to continue to make strides and to provide them with significant financial relief by dropping the unfair mandate to pre-fund its employees retirement health benefits.”

Josh Taylor, Senior Director of Professional Services, for San Diego-based Shipware, an audit and parcel consulting services company, explained that there have been a few notable examples of the USPS stepping up its game, in times of need, including being able to process ballots in a timely manner during the 2020 elections and during the 2020 Peak Season, when UPS and FedEx were abandoning some of their long-time customers with little notice in the middle of a pandemic, the USPS sucked up a huge spike in volume, saving Christmases across the country.

Taylor also highlighted how the USPS rationalized its shipping services and provided a performance cushion by eliminating overnight delivery of First-Class Mail and shifting it to ground transit times. As for its Delivering for America plan, he said it is expected to deliver the USPS a positive net income by 2024, citing certain parts of the plan, including an operating model that dramatically improves on-time delivery performance and commitments to visit every residence and business six times each week for mail and seven times each week for parcel delivery.

The USPS has definitely made strides as a carrier, according to Rick Watson, Founder and CEO of New York-based RMW Commerce Consulting.

“The 10-year plan contains everything you think it should: modernizing the company, rationalizing the workforce, and matching the supply and infrastructure to the current needs of consumers and demand,” he said. “Of course, having a plan is one thing and executing it is quite another. The entity is saddled with almost impossible demands on its service from consumers, as well as the workforce itself, so the organization continues to have an uphill climb.”

Watson is correct, in that the successful execution of the plan is critical. But one can’t overlook the positive momentum being witnessed at the USPS, following a lengthy period of what could be described as equal parts turmoil and uncertainty. Much more work needs to be done, but it appears the USPS is on the right path.