Current priorities

While the U.S. Postal Service is critically important to the American people and one of the most trusted brands in the government, we have been trapped in an unsustainable operating model, plagued by legislative, regulatory, stakeholder resistance, and management inaction. Since 2007, we have recorded significant net losses each year.

The Delivering for America 10-Year Strategic Plan establishes clear strategies to steadily achieve financial stability and service excellence. Our plan will generate enough revenue to cover our operating costs, enable investments in our people, infrastructure, and technology, and simultaneously provide our customers and the American people with the excellent service they expect and deserve. By implementing the totality of the strategies identified in the Delivering for America Plan we plan to reverse a projected $160 billion in losses over the next ten years.

Because of the enactment of postal reform legislation, and the rollout of the Delivering for America Plan, we do not have any pending legislative requests before Congress. The long-overdue reforms in the Postal Service Reform Act of 2022 were an important step forward. But what we need now is perseverance and unobstructed implementation of key self-help initiatives outlined in the Delivering for America Plan.

Self-help Initiatives:

The enactment of postal reform allows us to prioritize a series of self-help initiatives that put us on a path to financial sustainability. These focused initiatives are consistent with the Delivering for America Plan and are our near-term goals and objectives:

• Reduce our regional network transportation by at least $1.5 billion by aggregating volume in fewer facilities, moving mail and packages regionally in an integrated manner using less trips, reducing underutilized trips, and shifting air volume to ground transportation.

• Reduce our local transportation by $1 billion by optimizing routes and decreasing thousands of underutilized local trips a day.

• Reduce our Processing & Distribution costs by at least $1.5 billion by insourcing previously outsourced operations, reorganizing operating plans and schedules, adding more sortation equipment, to enable increased package volume, and improving operating tactics to increase throughput, gain productivity and increase asset utilization.

• Reduce our Retail & Delivery cost of performance by $1 billion by right-sizing workhours, equipping our delivery units, accelerating Sorting and Delivery Center (S&DC) implementation, optimizing our carrier route structures based on changing market conditions and improving operating tactics.

• Grow our package revenue by at least $3 billion by the introduction of new reliable and affordable products to the American people and American businesses that are aligned with our operating model and modernizing our approach to sales and marketing.

• Continue to recover market dominant revenue of $2 billion by leveraging our pricing authorities to offset past inflation and correct for 15 years of a defective pricing model.

Network Modernization:

A cornerstone of the Delivering for America Plan is a multi-year initiative to transform the aging and overly complex postal network into a modern, world-class logistics network that better serves our employees with improved work environments, and better serves our customers with more reliable and improved service performance.

The legacy processing network consists of a variety of existing facilities (Processing and Distribution Centers (P&DCs) and Network Distribution Centers (NDCs), along with numerous supportive ancillary facilities, many of which are contracted.

The future processing and delivery network will consist of standardized facilities, which fall into four categories:

• Regional Processing and Distribution Centers (RPDCs)
• Local Processing Centers (LPCs)
• Sorting and Delivery Centers (S&DCs)
• Delivery Unit

These facilities will be designed, staffed, and operated using a common set of standardized design principles, physical layouts, and operational processes that support the logical sequence of processing, transportation, and cross-docking functions for mail and packages. Standardizing operations will also enable the Postal Service to eliminate complexity, increase operational efficiency, and improve precision across the network.

RPDCs are intended to handle originating operations (for letters, flats, and packages) as well as destinating package operations for a designated region. RPDCs will also serve as a foundation for future growth since they will accommodate higher-powered package sortation equipment. They will also serve as the control point — or node — for a region, managing the flow of mail and packages that enter or leave its jurisdiction.

Within each RDPC region, there will also be several LPCs (precisely how many will vary across the regions). The intended function of an LPC is to handle destinating letter and flat sortation operations for designated 3-Digit ZIP Codes within the region, and to also serve as a collection point for packages moving to the delivery network. This will optimize mail flow, increase automation to reduce complexity, and increase reliability and improve performance.

In certain locations, LPCs will be co-located with the RPDC. In co-located locations, the LPC will perform the same functions as a separate LPC and will follow the same standardized processes and mail flows. The benefit of co-located buildings is a 100 percent reduction of transportation from the RPDC to the LPC.

The S&DC is a major component of our network transformation. S&DCs will refine many of the current 19,000 Delivery Units (DUs) by aggregating the some of the operational elements of five to 10 DUs into one large facility, which can serve a wider geographical area and much broader customer base.

Furthermore, consistent with our commitment to transparency around implementation of major initiatives, the Postal Service will continue to follow our pre-established, robust communication policies. We view communication as key to allowing our employees, communities, customers, and oversight bodies to understand the full benefits of network modernization. We are proud of and committed to DFA, and the key initiatives contained in it, including network modernization. Postal Service leadership will continue to proactively inform all stakeholders, including Congress, as we move forward with network modernization.

In addition, there will be no career employee layoffs as part of this initiative. All career bargaining unit reassignments, if necessary, as well as any adjustments in the number of pre-career employees, will be made in accordance with the respective collective bargaining agreements.

In addition to cost savings, other Network Modernization benefits include:

• A network designed for precision and optimized for current levels of mail and package volume.
• A network that supports 95 percent on time service performance goals.
• A network that provides a better working environment for our employees and a modern processing network for our customers.
• A network built for the efficient use of transportation, minimizing unnecessary and wasteful trips.

A Modern and Green Postal Fleet:

We are committed to the fiscally and operationally responsible roll-out of delivery vehicles for America’s largest and oldest federal fleet with an increasing electrification mix consistent with our mail delivery mission and network modernization.

Thanks to the Delivering for America Plan, and funding included in the Inflation Reduction Act (IRA), the Postal Service will operate one of the largest electric vehicle fleets in the nation. The Postal Service plans on procuring a total of 21,000 Commercial-Off-the-Shelf (COTS) electric vehicles (EVs). In addition, the Postal Service anticipates adding at least 45,000 battery-electric Next Generation Delivery Vehicles (NGDVs) by 2028, bringing the total number of EVs in the delivery fleet to more than 66,000.

The first NGDVs are expected on carrier routes in summer 2024, with electric COTS vehicles beginning in January 2024 — and a steadily increasing number already delivering mail.

To support the charging for all the newly purchased electric vehicles, both the COTS vehicles and future acquisitions including NGDV, the Postal Service awarded competitive contracts to three suppliers for the purchase of more than 14,000 charging stations to establish an initial and ongoing Electric Vehicle Supply Equipment (EVSE) inventory. This EVSE inventory is the charging station hardware and software needed to support EV charging at the facilities from which the delivery vehicles will operate.

These investments will make the Postal Service an electric vehicle leader in the federal government and will position us as the “greenest way to mail and ship,” in part because we are already delivering to every address six or seven days a week, and increasingly with electric vehicles or better emission combustion vehicles.

Administrative Action Needed on Civil Service Retirement System (CSRS) Reform:

We request that the Administration correct the longstanding, unfair allocation of CSRS benefits for legacy Post Office Department employees. Swift action by the Administration, would result in savings of $2-3 billion per year and up to $34.6 billion over 10 years.

Background — The Office of Personnel Management (OPM) apportions the cost of CSRS benefits for employees that worked at both the predecessor Post Office Department and the Postal Service between the Treasury and the Postal Service. The method that OPM currently uses for this apportionment is unfair and benefits the rest of the federal government at the expense of the Postal Service.

Since 1971, every time those employees received a pay increase, their CSRS pension benefits grew in value, including the benefits they earned while working for the Post Office Department.

However, Treasury pays only those benefits which were accrued up to 1971. We pay for all increases in pension benefits resulting from pay increases made after 1971, even though the Postal Service was not given direct control over wage increases or pension costs. This methodology is flawed and fails to reflect modern actuarial principles typically employed in the private sector for the allocation of pension liabilities.

A 2003 law, as well as the Postal Accountability and Enhancement Act (PAEA) in 2006, required the use of generally accepted actuarial practices and principles in determining the CSRS liability of the Postal Service, including the use of dynamic assumptions to account for employees’ anticipated future pay increases. However, OPM has applied these assumptions only to the Postal Service share of the costs. Our CSRS funding obligations increase each year, while the federal government’s obligations remain unchanged.

This simple and fair method to apportion government contributions to CSRS annuities for employees who transitioned to the Postal Service with prior creditable service at the pre-1971 Post Office Department would result in a substantial financial relief to the Postal Service. This change has also been recommended by the leaders of our congressional oversight committees and our employee unions.

Status Quo Is Not an Option, and We Must All Be Resolute Against It:

We are transforming into a modern, efficient, and financially sustainable organization capable of fulfilling our mandate to deliver to every American household six-days a week, and proving products and services the American people value.

The time has long since passed for prior perspectives that focused on process and procedure at the expense of meaningful results, that preserved the status quo for the short-term benefit of interested stakeholders who resisted change for parochial reasons, and that encouraged painstaking slow decision-making that permitted only incremental change while our condition of crisis persisted and was exacerbated. Now is the time where we must show a collective willingness to address an otherwise looming calamity, to rally around rational change, to put short-term self-interest and myopic thinking aside, and to confront the situation that faces the Postal Service by adopting the bold organizational, operational and market strategies in the DFA Plan that will change the trajectory of the Postal Service.

The Delivering for America Plan is a vision for the Postal Service to achieve service excellence and financial sustainability. However, we and the Congress must be realistic based on the headwinds we are facing that an even more resolute focus to cutting costs and generating revenue is required, now more than ever. Together, we need to act courageously, decisively, and immediately to fix the Postal Service, and permit it to endure. We are confident that the Delivering for America Plan is a rational roadmap for doing so.