USPS Plans To Raise Postage Prices Again in January Despite Operational Adjustments and Relief From Congress

While relief from the Postal Reform Act helps USPS reduce its operational costs, the Postal Service will have to hike postage rates again in January to reduce its losses.

With inflation running well ahead of USPS expectations, the Postal Service expects to incur an additional $1 billion of unexpected costs against its planned 2022 budget, said Postmaster General Louis DeJoy on Tuesday at the Postal Service Board of Governors Meeting.

Furthermore, he said that the U.S. Postal Service has made significant progress in reducing its losses since he took over the agency. At that time it was projected to lose $160 billion over the next ten years.

But with operational changes already introduced and a key benefit of the Postal Reform Act enabling USPS to defer its retiree benefit obligations similar to other federal agencies, the Postal Service still expects to lose between $60 to $70 billion over the same period.

USPS Needs To Take More Aggressive Action To Become Fiscally Responsible

With only about $20 billion in cash reserves, the U.S. Postal Service will have to “take immediate and substantial action,” Dejoy warned.

“All stakeholders need to realize that each day lost in executing on our strategy will consume cash and eventually accumulate to a cash deficit that will necessitate more aggressive actions by us or the federal government.”

Postmaster General and CEO Louis DeJoy

Today, the U.S. Postal Service management is “dialing down on almost every detail” of its operations and correcting processes that hurt service or add costs, he explained.

While this “plant by plant, delivery unit by delivery unit and transportation lane by transportation lane” effort will improve results, Dejoy said this will “fall far short of what we need to do to thrive in the near and distant future.”

He believes the improvements required for USPS to survive can only be achieved “by executing on the necessary structural changes in our processing, transportation, and delivery network.”

Even with all the changes the Postal Service is undergoing as outlined in its 10 Year ‘Delivering For America‘ Plan, raising prices will still be a necessity.

“Because of this, my recommendation to the governors will be to remain on course to raise prices again in January,” Dejoy concluded.

The full remarks by Postmaster General Louis Dejoy at Tuesday’s Postal Service Board of Governors Meeting are available here.

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