Resources

Postmaster General DeJoy Previews the Future of USPS

May 16, 2022

PMG addresses Quad Postal Conference

U.S. Postmaster General Louis DeJoy opened Quad’s 22nd Postal Conference May 3 with a frank assessment of the Postal Service’s challenges when he became PMG, and a warning.

“If you don’t believe the organization was in crisis, you’re not going to like me.”

DeJoy has been controversial since taking the PMG job in June 2020 near the start of the COVID-19 pandemic. He lowered delivery service standards, mothballed mail-sorting equipment and mailboxes, shifted resources to focus on package delivery, and raised postage rates significantly, with the latest round of hikes taking effect in July. He did it all without interacting much with the USPS’s biggest volume customers, commercial mailers.

DeJoy came to the job after retiring as founder and former CEO of New Breed Logistics, subsequently XPO Logistics, and admitted to the conference audience, “I built a business. I’m used to running stuff. I want my way.”

A new phase

His appearance at the Quad Postal Conference suggested a new phase of his tenure may be beginning, one in which the PMG does more to engage with customers. While the audience of business mailers and publishers was not enthusiastic about current and future rate hikes, they generally applauded his honesty about the Postal Service’s challenges and appreciated hearing from him firsthand.

“He’s not the first Postmaster General to come [to a Quad Postal Conference], but I think this is the first time I’ve heard someone just call it like it is from an operational standpoint,” Joel Quadracci, the President, CEO and Chairman of Quad said. “The Postal Service’s issues are from years of neglect, not properly right-sizing from a cost standpoint, not investing, and sooner or later we have to pay the piper.”

“He came in [to office] during the pandemic and had a lot of stuff thrown at him,” Quadracci added. “He had to make some really tough calls, and to have him here signals that he’s ready to be out there talking to customers.”

What’s wrong with the USPS

DeJoy began his keynote with a brutal catalog of the Postal Service’s problems. In his words these include:

  • “There was no plan for anything when I got there.”
  • “About the worst transportation system in the world — we aggregate, disaggregate and reaggregate mail multiple times before it’s delivered.”
  • “15 policy handbooks that hadn’t been updated for years and taught you how to do stuff wrong,” but were followed religiously.

Plus no transportation management system, improperly staffed plants, mail trucks regularly leaving only 30% or even 10% full, 15% of carriers not showing up on time and a vast retail network that was too big.

“So the point is, the place was in crisis, and it wasn’t a frozen thing. It was metastasizing,” he concluded.

DeJoy said he’s committed to improving the USPS’s profitability and on-time delivery performance, hinting that that there are more changes in the works. “We can’t do all things at all costs. That’s how you lose $10 billion a year.”

How to fix it

He pointed to positive developments that that will help:

  • Passage of the postal reform bill which, among other things, will save the USPS $50 billion over 10 years.
  • The guarantee of six-day-a-week delivery in the law. “That’s our ticket to future growth.”
  • A new fleet of vehicles coming on road in 2023.
  • A $15-20 billion investment in plants , technology and more over the next five years.

And more structural changes are in the works. He mentioned that reducing the number of employees and retail centers could be next. “We need them within easy reach of consumers, but do we need all of them?” He added, “We have to think differently from the way we did when we were so inefficient.”

DeJoy said one of his biggest tasks was reorganizing the physical distribution of mail, noting that it was a system and network that had evolved over hundreds of years. Postal associations are providing input to the USPS on that.

Inflation driving rate increases

The other big challenge is inflation, which is running higher than anyone expected. “We’ll try not to do two [postage price increases] a year. I understand that it’s hard for you, that’s been well communicated to me, but if we don’t capture inflation, that sets us back.”

DeJoy acknowledged that he would have to go slower than he would like. “I would rather build a postal service from scratch – I could go much faster. I feel like I’m in an antique store with signs all over saying ‘Don’t touch. Breakable.’ “

He asked the audience for patience. “We changed the pricing first. Now we’re in the process of changing the service, making it faster, adding, “We’re going to get ourselves in shape. I need some elbow room right now.”