The Package Coalition calls on Treasury’s Mnuchin to provide financial leeway for the USPS

A recent letter penned to United States Secretary of the Treasury Steven Mnuchin by John McHugh, chairman of The Package Coalition, a concern comprised of U.S.-based retail and e-commerce companies supporting fair competition in the package delivery business and the preservation of reliable package delivery services, called on Mnuchin to give the United States Postal Service (USPS) some leeway in regards to the $2 trillion Corona virus emergency packed, entitled the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was recently passed by Congress and signed into law by President Trump.

Specifically, the Package Coalition asked Mnuchin “that Treasury not impose onerous terms and conditions—including harmful policy changes—on the Postal Service in exchange for COVID emergency-related borrowing.”

The letter explained that the CARES Act provided the USPS with an additional $10 billion in borrowing authority to address operating losses caused by the COVID-19 crisis, subject to terms and conditions imposed by the Treasury. What’s more, it added that Treasury should allow the USPS access to COVID emergency-related borrowing without conditions and that it would be inappropriate for Treasury to use this emergency-related borrowing authority to implement harmful policy changes advocated by the President’s Task Force on the U.S. Postal System.

The financial issues of the USPS come as no surprise, given commonly cited reasons related to its ongoing revenue declines in First Class and Marketing Mail, which USPS said each continue to see declining volumes, coupled with volumes expected to fall further in the future, due to what the USPS has called the “migration to electronic communication and transactional alternatives resulting from technological changes.” Things like e-mail, texting, and other electronic communications channels continue to hinder First-Class Mail, too.

In December 2018, the USPS’s precarious financial situation prompted the U.S. Department of Treasury to issue a Task Force report on the USPS, entitled “United States Postal System: A Sustainable Path Forward,” which it said provides a series of recommendations to overhaul the USPS business model in order to return it to sustainability and not shift additional costs to taxpayers.

Topics studied by the Task Force, according to the report, included: the expansion and pricing of the package delivery market and the USPS’s role in competitive markets; the decline in mail volume and its implications for USPS self-financing and the USPS monopoly over letter delivery and mailboxes; the definition of the “universal service obligation” in light of changes in technology e-commerce marketing practices, and customer needs; the USPS’s role in the U.S. economy and in rural areas, communities, and small towns; and the state of the USPS business model, workforce, operations, costs, and pricing.

“Now is not the time to force the Postal Service to limit access to postal package delivery services,” wrote The Package Coalition’s McHugh. “More than ever, Americans are relying on the Postal Service as a lifeline to deliver medicine, ecommerce products, and mail and package deliveries to connect people sheltering in their homes with their loved ones. In the near term, the Postal Service may play a critical role in distributing testing kits, stimulus checks and absentee ballots as Americans weather the challenges of the current crisis. Now is not the time to force the Postal Service to raise prices on its package delivery services business by changing costing rules or separating business lines within the Postal Service. Such changes would harm, not help, consumers and businesses, especially those in rural and remote areas of the country where the Postal Service is the only affordable delivery alternative. The only beneficiary of such policy changes would be private express companies who operate in competition with the Postal Service.

In this time of crisis the Administration should be doing all it can to help sustain the Postal Service as a critical element of our national economic infrastructure and supply chain.”

John Haber, founder and CEO of Atlanta-based Spend Management Experts, told LM that the balance between helping the USPS in the short-term and further damaging them in the long-term is very delicate. 

“While we have been preaching that reform is going to be mandatory for the USPS to continue to function over the long-term, it’s dangerous to tie some of these changes to the COVID-19/CARES ACT funding as advocated by the President’s Task Force on the USPS,” he said. “This decision needs to be re-evaluated as requested yesterday by The Package Coalition, The USPS Board of Governors and The USPS Postmaster General.  We are in agreement that protections must be built into the funding to ensure that the $10B in additional funding is used wisely and appropriately.”