This is a contributed op-ed written by John M. McHugh, chairman of the Package Coalition. Previously, he was secretary of the U.S. Army and a member of the U.S. House of Representatives, representing Northern and Central New York. Opinions are the author's own.
Undoubtedly, 2020 was a challenging year for the United States Postal Service, just as it was a difficult year for businesses and Americans. Despite an unprecedented holiday shipping season, financial reports demonstrate that the Postal Service's competitive package business continues to grow and remains profitable.
As policymakers discuss potential postal legislation, they should look to solutions that support the Postal Service's role as an essential service and a critical part of the nation's economic infrastructure.
Reforms must build around the Postal Service's core strength — maintaining an integrated delivery network for mail and packages at least 6 days a week.
The Postal Service faced no shortage of trials last year. The COVID-19 pandemic tested USPS last spring when Americans first shifted to life at home, forcing us to order our medicines, groceries, household supplies and everything else we needed directly to our homes. Postal workers were hit hard by the virus, creating additional stress on the postal workforce and operations.
Everything came to a head in December, when the Postal Service faced a hundred-year-flood worth of packages for the holiday season.
The fact is, without the Postal Service, American businesses and consumers would have had even fewer options.
As COVID-19 rates rose and more families stayed at home instead of shopping in stores, package delivery volumes surged. Private carriers like UPS shrunk from the challenge, firing customers and implementing strict limits on packages from even the nation's top retailers like Gap, Nike, Macy's and L.L. Bean. It also imposed rural and residential delivery surcharges on many Americans.
USPS, on the other hand, stepped up to the challenge.
Choice and affordability
Consistent with its mission as essential service, the Postal Service continued to accept packages from retailers big and small, as well as personal holiday packages to family and friends.
The fact is, without the Postal Service, American businesses and consumers would have had even fewer options. USPS provides Americans with choice and affordability. Its package services are critical to maintaining competition amongst carriers and choice for American businesses and consumers.
Congress must ensure the Postal Service has the tools to efficiently provide affordable delivery services for mail and packages for all American businesses and consumers.
Criticisms of USPS' package business are off base. The profit on competitive package services reached $11 billion last year. During the holiday peak, the Postal Service's package volumes grew by more than 40% YoY, with a $2.8 billion increase in package revenues.
The integrated network of both letter mail and packages is essential to the health of the Postal Service. Delivering mail and packages together are essential to sustaining the Postal Service. The efficiencies of an integrated network allow the Postal Service to provide more affordable delivery services for mail and packages.
By pairing them together, the competitive package services' profitability supports the nationwide delivery network. Americans' shift to e-commerce in the face of the pandemic will have a lasting impact on how we expect to send and receive basic goods beyond the pandemic.
The emergency relief provided by Congress at the end of last year was necessary, but not sufficient. Congress must ensure the Postal Service has the tools to efficiently provide affordable delivery services for mail and packages for all American businesses and consumers.