The United States Postal Service warned on Tuesday that it must implement significant cuts to retail branches and service levels unless Congress intervenes to address an ongoing cash crisis and widening financial losses.
Postmaster General David Steiner announced the agency’s precarious position during a meeting, stating that the organization must look toward drastic changes to meet its obligations.
We will need to make drastic changes in the number of Post offices and marketing mail service levels, and we will need to look at other areas to generate the cash we need to meet our obligations to our employees and to the American public,
Steiner said.
Postal Service net losses reach $120 billion since 2007
The agency reported a net loss of $6.5 billion for the 12 months ending Sept. 30, an improvement over the $9 billion net loss recorded during the prior 12 months. Driven by the growth of digital communications and the persistence of costly nationwide delivery mandates, the Postal Service has accumulated roughly $120 billion in total net losses since 2007, largely stemming from a sharp drop in first-class mail, which represents its most lucrative product.
USPS faces drastic cuts to branches and mail delivery
Operating costs continue to challenge the agency. Maintaining six-day delivery to 170 million addresses costs $3.4 billion annually, with 70% of those routes currently losing money. About 58% of the agency’s 18,000 Post Offices operate at a loss.
Steiner calls for Congress to reform unsustainable business model
Steiner has repeatedly called for structural reform, arguing that the agency’s current business model is unsustainable. The problem is simple. The Postal Service has a broken business model and action is needed by Congress to fix it,
Steiner wrote in projections published on June 24.
The Postmaster General noted that the agency lacks the flexibility afforded to private-sector enterprises. Every lever that is available to private-sector enterprises, or even other government agencies, is unavailable to the Postal Service,
he stated.
US Postal Service warns of need for new cuts
To manage its liquidity, the Postal Service has suspended some employer payments toward a federal pension program. This move is projected to conserve $2.5 billion through September 30 and potentially up to $15 billion by 2030.
Despite these measures, Steiner emphasized the severity of the agency’s situation in testimony before a U.S. Senate committee earlier this year. The bottom line is that we are out of cash. We are borrowing from our employees’ retirement funds to continue operations. I am not comfortable with that, our employees are not comfortable with that, and those of you in Congress should not be comfortable with that,
he said.
Cash reserves could fall below zero by fiscal 2035
The agency’s long-term cash outlook depends on various scenarios regarding congressional action and operational adjustments. If the Postal Service continues to defer payments, its base-case projection shows cash peaking at $17.5 billion in fiscal 2031, then falling below zero by fiscal 2035. In a gloomier outlook, cash reserves deplete during fiscal 2032 and drop down to negative $39.4 billion by the arrival of fiscal year 2035.
Steiner has outlined several paths forward, including the possibility of reducing delivery from six days a week, closing some post offices, or raising the price of a First-Class stamp to 90 cents or more. These remain potential options rather than confirmed changes, as the agency continues to seek a legislative fix to avoid a scenario where it can no longer deliver mail.