(CBS MONEYWATCH) — The U.S. Postal Service is investing in new package sorting machines and hiring new workers to prep for the crucial holiday season, with Postmaster General Louis DeJoy on Wednesday saying the agency is “ready” for the busy season.
“So send us your packages and your mail —and we will deliver timely,” DeJoy said at the USPS Board of Governors meeting on Wednesday.
Yet the postal service is already missing its delivery standards: In October, a month when mail volume is typically lighter than the holiday season, 91% of mail was delivered on time — lower than its goal of delivering 95% on time. And those missed standards already represent the USPS’ new lower delivery guidelines, which went into effect in October and slowed delivery for 4 out of 10 pieces of mail.
“It underscores they aren’t performing and doing what they said they were going to do,” noted Paul Steidler, senior fellow at the Lexington Institute and an expert on the postal service. “It’s especially not great for October because it’s a slow month for mail, so it’s not a good barometer” for the performance during the coming holiday season.
The pressure is on the USPS — and Postmaster General DeJoy — to improve performance after last year’s disastrous holiday season. Consumers were hit with delivery delays as the USPS struggled with unprecedented demand partly sparked by a shift to online shopping due to COVID-19. DeJoy on Wednesday described the postal agency as “overwhelmed” last holiday season, but promised this year would be better.
The USPS said that it has been planning for the holiday season since earlier this year. Its on-time performance of 91.1% represents an improvement of 3.1 percentage points from last year’s fourth quarter, a spokeswoman told CBS MoneyWatch.
“Every year we urge customers to plan ahead and ship their holiday gifts early because the longer you wait, the more limited your choices of shipping options become,” the spokeswoman said.
Plan for extra time — even for holidays cards
Postal experts agree: Plan for longer delivery times, especially with first-class mail.
“I would take whatever the standards are for what you are mailing — it’s now 5 business days coast-to-coast — and I’d add two days onto it,” said Steidler. “It’s important to know that, not only for the holidays but for end-of-year bills.”
The USPS is placing more emphasis on package delivery than first-class mail, even though the latter is at the core of its historic mission, noted Robert Shapiro, a postal expert and founder and chairman of economic advisory firm Sonecon. That’s because package delivery is a growing business, while first-class mail is shrinking as people shift to online bill payments and other services.
“Recently they made a policy decision saying, ‘We’re going to change the standards for on-time delivery,’ so they will continue to sacrifice on-time delivery of mail in order to expand their market share of parcel delivery because that’s the growing business,” Shapiro noted. “They don’t care about universal mail delivery because it’s the shrinking division of the company.”
He added, “There is every reason to believe mail delivery will deteriorate badly in the holiday season, and we’ll see what happens with package delivery.”
The postal service’s most recent financial results underscore the challenges: Revenue from first-class mail declined 2.1% in the fiscal year ended in September, while revenue from shipping and packages rose 12.2%.
Because of those shifting priorities, it’s likely that package delivery from the postal service this holiday season will perform better than first-class mail, especially as the USPS gears up to compete with FedEx, UPS and others, postal experts said.
10-year plan to erase billions in losses
Americans generally view the USPS favorably, with the postal service taking top marks among major federal agencies in a 2020 survey by the Pew Research Center. But many people are also passionate about getting their mail on time, with some lawmakers last year getting an earful from constituents about late deliveries.
The USPS, meanwhile, is deploying a 10-year plan that it argues will erase a projected $160 billion loss over the next decade. To achieve that goal, the agency is boosting revenue through expanded parcel delivery and postage hikes, as well as slowing delivery standards for first-class mail.
But experts say that cutting back on delivery standards undermines the core mission of the USPS, which is universal mail delivery. It also will hurt elderly Americans, the disabled and those living in rural regions, who are more dependent on the mail than others, experts have warned.
At the same time, DeJoy said the agency is investing in both equipment and personnel. The USPS has installed 92 of 112 new package sorting machines since April, and it plans to add another 50 machines that can sort large packages by December. Together, that is expexted to give the USPS the ability to process an extra 4.5 million packages a day.
The postal service also converted 33,000 “non-career” employees — who don’t get full federal benefits — to career workers, who do receive those benefits.
In the meantime, first-class mail delivery isn’t likely to improve, experts said.
“Unless either Congress or new leadership at the USPS says, ‘We are recommitting to our public mission [of mail delivery],’ this will just continue and I think will likely get worse,” Shapiro said.
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