U.S. Postal Service proposes revamp plan that would slow some mail

By David Shepardson

WASHINGTON (Reuters) – The U.S. Postal Service (USPS) on Tuesday outlined a proposed 10-year strategic plan that would slow current first-class delivery standards and raise some prices to stem $160 billion in forecasted red ink over the next decade.

The plan would revise existing service standards for first-class mail letters from the current one to three days to one to five days. USPS said 61% of current first-class mail volume would stay at its current standard. It would shift more deliveries to trucks rather than airplanes, consolidate mail processing and cut hours at some retail locations.

USPS Postmaster General Louis DeJoy, a supporter of former President Donald Trump who was named last year to head USPS, said without changes the Postal Service would need a "government bailout" — something it does not want to seek.

USPS needs significant financial relief from Congress and the Biden administration from pre-funding obligations and other changes that could address $58 billion in anticipated losses.

USPS has reported net losses totaling $86.7 billion from 2007 through 2020. One reason for the red ink is that Congress in 2006 passed legislation requiring USPS to pre-fund more than $120 billion in retiree health care and pension liabilities. Labor unions have called this requirement an unfair burden that other businesses do not share.

Representative Carolyn Maloney, who chairs the committee that oversees USPS, has circulated draft legislation to address pre-funding obligations and other USPS financial issues.

USPS says the current standards are "not achievable." For the last budget year, average first-class mail service

performance was 89.7 percent, more than 6 percentage points below target.

The plan would invest $4 billion to refurbish retail outlets, and consolidate some city postal locations.

It seeks to move more first-class mail by trucks rather than air but does not eliminate use of airplanes.

USPS said the cost to mail a first-class letter is significantly less than other countries like Australia, Canada, Japan and the United Kingdom.

USPS also said it could commit to an all-electric delivery fleet by 2035 with assistance from Congress — and vows to spend $11 billion on vehicles over the next decade. Earlier this month, USPS said it could electrify its fleet to the "maximum extent" operationally feasible if it received about $8 billion in government assistance.

In February, USPS picked Oshkosh Defense for a multibillion-dollar contract to make up to 165,000 delivery vehicles, rejecting an all-electric bid by Workhorse Group.

(Reporting by David Shepardson; Editing by Chizu Nomiyama and David Gregorio)

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