Postal Service’s performance declined last year


Last week, the House Oversight and Government Reform Committee hauled Postmaster General Louis DeJoy before it and spent the better part of five and a half hours denouncing him.

In part, majority Democrats were politicking — they rehashed their calumny that DeJoy was a Trumpy mephistopheles who plotted to steal the election by delaying mail-in ballots. Of course this was nonsense. Nearly 98 percent of 135 million ballots went from voters to election officials within three days. But beating up on DeJoy lights up the liberal base on Twitter. Some Democrats also wanted to send a message to the White House: get rid of DeJoy by stocking the USPS’s Board of Governors with Democrats.

But a significant amount of legislators’ questions to DeJoy were about the delivery troubles the US Postal Service (USPS) had this past year — particularly during the holiday season. And these problems were real.

Source: US Postal Service data via Jones et al. v. United States Postal Service et al, 2020.

As the figure above shows, on-time delivery slid modestly in July and August and then cratered in late November and December.

Many Democrats and media initially blamed the summer slump on DeJoy’s cost-cutting. In fact, the USPS’s costs spiked last year. So spending was not the cause, but that did not prevent Democrats from mentioning the non-existent cuts to spending and worker overtime during the hearing.

Thankfully, someone on the dais mentioned that the US Postal Service Inspector General (IG) had studied the summer troubles. DeJoy was partly to blame, as he ordered a few logistical changes, such as expediting departures of USPS’s mail-hauling trucks from sorting facilities. DeJoy later revised some of these decisions, and performance partially — but not entirely — recovered. But there were other factors that were outside of DeJoy’s hands, such as employee depletions from COVID-19.

The mail delays of July and August, however, were modest compared to the hold-ups during the holiday season. On-time delivery of first-class mail slumped to 62 percent and periodicals an abysmal 45 percent. What happened?

In his written testimony, DeJoy pointed to various factors that drove down USPS delivery performance: “Throughout the peak season, the Postal Service faced multiple challenges, including significant employee shortages as a result of the COVID-19 pandemic, multiple winter storms in the Northeast, capacity issues with airlifts and trucking, and a historic high level of mail and package volumes.”

Under questioning, the Postmaster General cited a factor given too little attention: The USPS was overwhelmed by a surfeit of parcels.

The USPS was built to carry paper mail, not boxes. The giant machines used to sort letter mail and postcards cannot be used to sort parcels. A USPS 18-wheel truck, DeJoy said, can carry 500,000 pieces of paper mail but only about 5,000 boxes.

And come late November, the agency got swamped by boxes. Consider: In 2010, USPS earned $8.7 billion (13 percent) of its revenue from packages. Last year, the agency got $28 billion (almost 39 percent) of its revenue from parcels. A postal executive told me, “The Postal Service delivered 1.67 billion more packages in 2020 than 2019, totaling more than 7.75 billion packages. … That’s a physical product that must be sorted, transported, and delivered. All told, if USPS stacked all the packages they delivered last year, one on top of each other, the stack would reach the moon three times over.”

I heard the same thing from a postal worker whom I correspond with. “I was always under the impression that we could handle anything that was thrown at us. That definitely isn’t the case. Parcels are just sitting in distribution centers across the country just waiting to be sorted. … [T]his company needs a lot of new equipment.”

The USPS recently announced it had ordered a new fleet of delivery trucks, which will be able to hold more parcels. But the agency also will need new sorting machines and must reconfigure or expand some of their facilities — which, again, were not built to handle so many packages. All of which is very expensive, and risky. The USPS warns in its annual financial statement that most of the parcels it delivers come from a few big companies (e.g., Amazon), and those companies are building out their own delivery networks. Which creates the peril that the agency could over-invest in capacity and then experience sharp parcel volume declines.

While it seems clear the crush of parcels played a significant role, it would be valuable to have the US Postal Service inspector general analyze what factors affected delivery and the relative weight of these factors. Doing this would clarify whether the delivery slowdowns were caused by factors mostly endogenous or exogenous to Postmaster General DeJoy’s decision-making.

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