Soon after United States Postal Service (USPS) Postmaster General Louis DeJoy notified the Postal Service Board of Governors “it is time for them to begin the process of identifying his successor” on February 18, reports surfaced late last week that the White House intends to make major changes to the organization.
A Wall Street Journal report stated that President Trump will issue an executive order, in which members of the USPS governing board would be fired and also put the USPS under the direct control of the United States Department of Commerce. And a Washington Post report said that the board has retained outside counsel and gave “instructions to the White House if the president removed members of the board or attempt to alter the agency’s independent status.”
But this development is far from a done deal, with reports citing the White House as saying that it has no plans to issue an executive order.
As stated in the Federal Register, the USPS was created as an independent establishment of the executive branch by the Postal Reorganization Act, approved August 20, 1970. Even with that being the case, though, the Post report noted that taking the USPS private has been something Trump has been interested in, citing the competition it faces from UPS, FedEx, and Amazon, adding it is an idea that has generated interest for a while.
Feedback from parcel sector experts made it clear that there are a lot of moving parts when it comes to making a move of this magnitude, placing the USPS under the control of the Commerce Department and effectively end its status as an independent agency, given the size and scope of the USPS, as well as its well-documented financial challenges over the years.
“On the one hand, the USPS has lost over $100 billion since 2007,” said Rob Martinez, founder of San Diego-based parcel consultancy Shipware. “Placing the agency under the Commerce Department could enhance financial oversight and operational efficiency while streamlining decision making on prices, products, delivery standards, etc. However, it is not entirely fair to blame the USPS itself for its financial losses, as a significant portion of its deficit stems from the ill-conceived Postal Accountability and Enhancement Act (PAEA) of 2006. This law imposed an unprecedented requirement that the USPS pre-fund retiree health benefits for employees 75 years (!) into the future, something no other government agency or private company is required to do.”
What’s more, Martinez observed that without this requirement, the USPS would likely have been operating at a modest profit or at least breaking even in many years.
“The PAEA also restricted the USPS from setting its own rates freely, further limiting its ability to recover costs,” he said. “And let’s remember that the USPS is a self-funded entity relying on NO taxpayer money for operations; yet it is still constrained by congressional oversight. (Note, the Postal Service Reform Act of 2022 introduced significant changes to the USPS, eliminating the mandate to pre-fund retiree health benefits. However, it did NOT grant broader authority to set postal rates.).”
Should President Trump proceed with the announced plans, Martinez explained that any such move would undoubtedly and immediately trigger legal challenges.
“The USPS’s independence is rooted in the Postal Reorganization Act of 1970, specifically designed to insulate it from political influence, ensuring unbiased operations and decision-making,” he said. “Imagine the political implications of inserting the agency into the President’s Cabinet for immediate control: such a move would raise serious concerns about impartiality, especially regarding mail-in voting (which President Trump has disavowed as contributory to voter fraud). I’ve heard TV pundits argue that some of President Trump’s flurry of executive orders in the initial weeks of his second administration have been a case of ‘Fire, Aim, Ready.’ However, I’m confident that President Trump would agree that critical changes to the U.S. Postal Service should never be implemented impulsively or without proper preparation or strategy, but rather fully and independently studied with dissenting opinions evaluated and carefully considered.”
Jerry Hempstead, president of Orlando-based Hempstead Consulting, said that if the Board of Governors were removed, little would change for the USPS.
What needs to change instead, for the USPS, he noted, is the price of postage itself.
“It needs to cover its costs and make a profit,” he said. “That’s not happening right now. The USPS has a legislated monopoly for First-Class mail. That said, it’s insane that it operates at a loss. That’s what needs fixing. The other thing, I think, is that few if any need daily delivery of mail (not talking parcels) on a daily basis. I did a study and held my mail for 30 days. I had one piece of mail that needed to be opened. I’m actually in the process of redoing that study right now. People think the world will end if we don’t get daily delivery of all that paper that ends up in your recycling can each day.”
Earlier this month, the USPS issued fiscal first quarter earnings results, which saw some annual gains.
Operating revenue, at $22.499 billion, increased 4.1%, annually, paced by what the USPS called strategic price increases, as well as a strong political and election mailing season. Net income, at $144 million, marked a solid turnaround, compared a $2.1 billion net loss a year ago, largely driven by various strategic initiatives through the organization’s “Delivering for America” plan. Total quarterly volume, at 31.015 million pieces, rose 1.8% annually.
