The U.S. Postal Service has promised to continue raising prices with a historically unusual clip, although the agency has significantly increased its revenues and will soon realize significant savings from a reform measure recently signed by President Biden in law.

The USPS still reported a net loss of $ 639 million between January 1 and March 31, up from $ 82 million in the same period last year. The Postal Reform Act was not enacted until after the second quarter of fiscal 2022, which means that the relief it will provide by removing the requirement for postal services to pay healthcare in advance for future retirees is not reflected in the financial results. The USPS increased revenue in the quarter by about $ 900 million, a 5% increase over the same period in 2021. Volume increased by about 3%.

Still, Post Chief of Staff Louis DeJ said he would not give up using his new power to raise interest rates well above inflation for the next few years. The Postal Regulatory Commission has allowed higher increases in 2020, and Dejoy has touched power many times, calling them a key part of his plan to allow the USPS to go flawless. The USPS announced last month that it will increase tariffs for ordinary first-class mail by 6.5% and increase them by 8.5% for parcel services from July 10.

At a board meeting Thursday, Dejoy said the reform bill – expected to save a total of $ 107 billion for the USPS by eliminating existing debt and removing future debt from his books – would not be enough to get the agency out of the red.

“Therefore, in my view, the postal services industry must be prepared to continue to use our authority to raise the prices of market-dominant products at an awkward pace until we meet our goal of designing a trajectory that shows us that we are becoming self-maintenance – as required by law, “Dejoy said.” While our pricing decisions are ultimately led by the Board of Governors, I will most likely advocate for these increases in the near future.

PostCom, an association of large-scale postal senders, and the Alliance of Non-Governmental Postal Organizations have called on the postal regulator to repeal the right, noting that the post office’s financial outlook has changed dramatically since President Biden signed a law reform measure. The groups had previously tried to block the new government from coming to power, but lost the case in federal court. While the senders said they wanted a revision in light of the new law, which “radically changes” the finances of the USPS, the management of the post office objected that the groups are simply seeking to reconsider an issue that has already been settled. The petition is still awaiting a decision from the PRC.

In a recent interview with Government executiveDeJoy said that not taking advantage of the high price increases would mean a subsidy for large postal services and it would be “negligent” not to take advantage of his power.

“Boy, I’d like to be a great gentleman who didn’t raise prices or change anything, but suddenly the place was profitable,” Dejoy said. “It’s not done that way. It doesn’t happen without change. “

Excluding factors beyond management’s control, such as inflation adjustments to workers’ compensation costs, the USPS lost $ 1.7 billion in the quarter. The increase in revenue was caused by a 16% jump in marketing mail, a 5% jump in first-class mail and a 1.3% increase in packages. However, the growth was not enough to outpace rising costs, as operating costs jumped by $ 1.5 billion, or almost 8%. The USPS said the increases were largely driven by inflation, which Dejoy also noted, suggesting that higher interest rates were needed.

The USPS significantly improved productivity during the quarter, delivering 88% of first-class mail on time, up from 78% in the same period last year. These figures were supported by DeJoy’s decision to delay delivery windows by about 40% of mail – making it easier for the USPS to meet its targets – but the average delivery time also dropped. The postal service also delivered 320 million test kits for COVID-19, paid for by the US federal government in the quarter.



https://www.govexec.com/management/2022/05/usps-promising-more-severe-price-hikes-even-revenues-grow-nearly-1b/366622/

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