Postal Audit Pain

“The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout.”

On April 12, President Trump issued an executive order to form a “Task Force on United States Postal System.” The task force, chaired by Treasury Secretary Steven Mnuchin, is required to complete an audit of both the operations and finances of the postal service and present findings and recommendations by early August. The order comes on the heels of multiple accusations from the President that the USPS is losing money in its agreement with online retail giant Amazon; with the former tweeting as recently as March 31 that the USPS will lose “$1.50 on average for each package it delivers for Amazon.” As the agreement between Amazon and the postal service is considered proprietary information, it currently remains private.

While we’ve seen the service struggle financially over much of the last decade, experts speculate the bulk of their financial woes originate from a 2006 law mandating that the USPS pre-fund retiree health benefits, alongside a steep decline in first class mail. Postal service experts also have noted the volume of packages shipped by Amazon and handled by USPS may be what is actually keeping them financially solvent.

The executive order, in part, calls for the task force to examine the USPS’s role in competing with other, private delivery companies; reviewing the service’s “universal service obligation”, which requires the service to deliver to everyone in the United States; and reviewing “the USPS role in the US economy and in rural areas, communities, and small towns.”

To be sure, there are many factors at play here, and this adds another level of uncertainty to the direct mail industry. At this point we will need to play the waiting game, though you can rest assured that Production Solutions will be staying abreast of all things Postal and will continue to update you as more information becomes available.