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U.S. Postal Service Must Grow Revenue, Not Just Cut Costs, Says New Postmaster General
The U.S. Postal Service needs to expand its revenue streams rather than rely solely on budget cuts to restore financial stability, Postmaster General David Steiner declared during Friday’s Postal Board of Governors meeting in Washington.
“I’ve taken to saying that we cannot cost-cut our way to prosperity,” Steiner said. “We have to grow.”
Steiner, who assumed the role in July after previously serving on FedEx’s board, outlined a strategy focusing on the agency’s unique position in the delivery market. He emphasized leveraging the postal service’s legal mandate to deliver to every address in the country, highlighting this obligation as a potential competitive advantage.
A key initiative involves expanding USPS’s “last mile” delivery services – the final leg of package transport to homes and businesses, typically the most expensive and labor-intensive portion of the delivery process. The agency is currently negotiating deals with UPS and similar companies to handle more of these final deliveries.
“We’ve begun discussions with a number of retailers, and the desire for fast, reliable and affordable delivery is certainly strong among all retailers,” Steiner noted. “Our value resides in going to every address six and often seven days a week while offering a remarkable retail and processing footprint.”
The strategy aims to offer same-day and next-day delivery options to both large and small retailers, potentially opening new revenue streams for the 150-year-old institution.
Despite the optimistic outlook, USPS continues to face significant financial challenges. The agency’s latest financial report revealed operating revenue of $80.5 billion – a $916 million increase from the previous fiscal year – but still posted a net loss of $9 billion. While this represents a modest improvement from the $9.5 billion loss recorded in the prior fiscal year, it underscores the postal service’s ongoing financial struggles.
Amber McReynolds, who was re-elected chair of the Postal Board of Governors during Friday’s meeting, highlighted several structural issues hampering USPS’s financial health. She cited “long-standing and unnecessary restrictions” that burden the agency’s bottom line and called for executive and legislative action to ensure long-term sustainability.
McReynolds specifically pointed to the agency’s disproportionate retirement system contribution requirements compared to other federal entities. She also noted that USPS is limited to investing retirement funds only in treasury securities, potentially costing the organization “hundreds of billions of dollars” that could be earned through a diversified investment portfolio.
“This is urgent and it is time for action,” McReynolds emphasized, calling for congressional updates to USPS’s pricing system, workers’ compensation program, and borrowing limits – which haven’t been revised since 1991.
Steiner acknowledged that cost-cutting measures remain necessary alongside revenue growth initiatives. He advocated for implementing artificial intelligence within the USPS logistics network and securing greater flexibility in the agency’s borrowing capabilities.
“To do all of this, we need capital and the ability to leverage our assets,” Steiner said. “We should be able to borrow like our competitors, who are not limited by statute.”
During his first 100 days as postmaster general, Steiner has visited more than 20 postal facilities and engaged with thousands of workers and stakeholders. He expressed commitment to continuing the $40 billion, 10-year modernization and financial stabilization plan initiated by his predecessor, Louis DeJoy.
Steiner noted improvements in service metrics, reporting that on-time mail delivery has steadily improved, with most customers now receiving their mail and packages in less than three days on average. He assured that the postal service is well-prepared for the upcoming holiday season, having invested $20 billion over the past four years in mail processing and logistics modernization. The agency plans to hire approximately 14,000 seasonal workers – described as a “modest” number due to the agency’s “stabilized workforce.”
Addressing concerns raised by members of the public regarding potential privatization – an idea previously floated by President-elect Donald Trump and his former adviser Elon Musk – McReynolds firmly stated: “There are no proposals or plans to privatize the postal service.”
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11 Comments
The Postmaster General makes a fair point – the USPS can’t just rely on cost-cutting to address its financial challenges. Expanding service offerings, especially in the ‘last mile’ delivery space, could be a smart way to boost revenue. It will be interesting to see how this plays out.
Agreed. The USPS has a unique position in the delivery market that it should leverage. Partnering with retailers and other shippers on last-mile services seems like a logical step to drive new revenue.
The USPS faces some significant financial challenges, so I’m glad to see the new Postmaster General take a more proactive approach focused on revenue growth rather than just cuts. Expanding partnerships and service offerings seems like a prudent strategy.
Agreed. With the rise of ecommerce, the USPS has an opportunity to play a bigger role in last-mile delivery. Maximizing that potential could boost their revenue and long-term sustainability.
Interesting to hear the Postmaster General’s perspective on the need for revenue growth, not just cuts, at the USPS. Expanding their ‘last mile’ delivery services could be a smart way to capitalize on their nationwide delivery network and legal mandate.
Yes, leveraging their unique capabilities and infrastructure to provide more services could help the USPS become more financially stable long-term. It will be important to see how they execute on this strategy.
This is an interesting perspective from the Postmaster General. The USPS has a unique delivery network that could be a competitive advantage if leveraged properly. Focusing on revenue growth through expanded services seems like a sensible approach.
Yes, it will be important to see how the USPS implements this strategy and what new revenue streams they are able to develop. Maintaining financial stability is critical for the agency’s long-term future.
Shifting the focus to revenue growth rather than just cost-cutting is a prudent move by the USPS leadership. Their nationwide delivery network is a valuable asset that could be better monetized through expanded services and partnerships. It will be important to execute this strategy effectively.
Yes, the USPS has to find ways to capitalize on its strengths and unique position in the market. Expanding last-mile delivery services could be a good opportunity, but they’ll need to be strategic and efficient in how they implement it.
The Postmaster General’s emphasis on revenue growth over just cost-cutting is an encouraging shift in approach. The USPS has an extensive infrastructure and delivery network that could be leveraged to provide more services and generate new revenue streams. It will be crucial to see how they execute on this strategy.