House passes US Postal Service reform bill

Bipartisan legislation strengthening U.S. Postal Service operations while removing billions of dollars in financial burdens from the agency passed in the House of Representatives on Tuesday.

The Postal Service Reform Act of 2021, which passed by a vote of 342-92, would codify into law a service provision that has been the foundation of the agency for businesses and consumers: a six-day-per-week, integrated network for mail and packages.

The provision avoids the potential for splitting the Postal Service into separate units that some speculated would have led to operational chaos for the agency, which already struggles to compete for last-mile delivery with UPS [NYSE: UPS], FedEx [NYSE: FDX] and Amazon [NASDAQ: AMZN].

The legislation would also eliminate a requirement set by Congress in 2006 that the Postal Service pre-fund retiree health benefits — a rule imposed on no other agency or private company.

The Postal Service currently has approximately $35 billion in unfunded retiree health benefit liabilities and has not paid into the fund for a decade. By removing this burden, the Postal Service says it will drastically reduce its pre-funding liability, allowing it to save roughly $27 billion over 10 years.

Amazon, one of the Postal Service’s biggest customers, strongly supports the legislation, particularly the provision that requires maintaining its integrated network. “Americans across the country have long depended on the [Postal Service] for its reliable and affordable delivery options. Codifying these essential services is critical now more than ever, as families and businesses are increasingly relying on vital mail and package deliveries,” Brian Huseman, Amazon’s vice president for public policy, wrote in a support letter.

The reform bill passed the House just hours after the Postal Service announced its latest financial hit: an adjusted loss of approximately $1.3 billion, compared with an adjusted loss of $288 million for the same quarter last year, for its FY22 first quarter (Oct. 1-Dec. 31, 2021).

“We are encouraged that Congress is moving forward with postal reform legislation and strongly support enactment,” Postmaster General Louis DeJoy commented in announcing the results. “These reforms will help ensure that the Postal Service can operate in a financially sustainable manner.”

A summary of the legislation noted additional provisions aimed at improving the agency, including:

• A requirement that future Postal Service retirees enroll in Medicare. Roughly a quarter of postal retirees currently do not enroll in Medicare even though they are eligible. This means the Postal Service pays far higher premiums than any other public- or private-sector employer. By more closely integrating Medicare, the Postal Service estimates it could save $22.6 billion over 10 years.
• Increased funding autonomy and control for the Postal Regulatory Commission to increase its budgetary resources commensurate with its mission of regulating the Postal Service, and to shield the PRC from government shutdowns.
• A PRC review of cost attribution guidelines for different Postal Service products to ensure pricing accuracy and better accounting.
• A study on operational inefficiencies in Postal Service flats and magazine processing.
• Regular congressional reporting on Postal Service operations and financial performance to enable accountability of stated cost savings, revenue and infrastructure investment goals.
• Adjustments to the considerations the Postal Service must make when deciding which mode of transportation to use to deliver mail in order to ensure greater consistency and reliability.

The legislation now moves to the Senate, where a companion bill, S.1720, also has bipartisan support.

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Source: https://www.freightwaves.com/news
Editor: John Gallagher, Washington Correspondent