From the U.S. Government Accountability Office, www.gao.gov

Transcript for: U.S. Postal Service Confronts Challenges During and
After the Pandemic

Description: COVID-19 changed how people use the U.S. Postal Service.
While the postal service was in higher demand during the pandemic, it
also saw financial losses and fewer on time deliveries. As the pandemic
begins to slow, what is the state of the postal service's financial
health and its future outlook? We talk to GAO's Jill Naamane to learn
more.

Related GAO Work: GAO-21-261, U.S. Postal Service: Volume, Performance,
and Financial Changes since the Onset of the COVID-19 Pandemic

Released: April 2021 

[Intro music:]

[Jill Naamane:] Well, if it seems like your mail has been taking longer
to arrive during the pandemic, delivery times did indeed slip last year. 

[Holly Hobbs:] Hi and welcome to GAO's Watchdog Report, your source for
news and information from the U.S. Government Accountability
Office--celebrating 100 years of fact-based, non-partisan oversight. I'm
Holly Hobbs.
COVID-19 changed how people use the U.S. Postal Service. While the
postal service was in higher demand during the pandemic, it also saw
financial losses and fewer on time deliveries. As the pandemic begins to
slow, what is the state of the postal service's financial health and its
future outlook?
Today, we'll talk with Jill Naamane, an expert on the U.S. Postal
Service and an acting director in our Physical Infrastructure Team.
Thank you for joining us, Jill.

[Jill Naamane:] Thanks for having me.

[Holly Hobbs:] So, Jill, can you give us an overview of how the U.S.
Postal Service was affected by COVID-19? Let's start with mail volume.

[Jill Naamane:] With more online shopping and other package delivery
companies using the postal service to get their packages to your house,
package volume actually increased quite a bit last year over 2019
levels. Fifteen million more packages, actually. But the volume of
letters has been declining for years with more online communication and
payments. And last year is not an exception. Even with a spike in mail
volume from the general election, Americans sent almost 12 billion fewer
pieces of mail last year compared to 2019.

[Holly Hobbs:] What about things like on time delivery? How is that
impacted?

[Jill Naamane:] Well, if it seems like your mail has been taking longer
to arrive, the analysis we did confirm the delivery times did indeed
slip last year. The average on time performance was lower in 2020
compared to 2019. And in December or around the holidays, it dipped even
more. We also found that certain places, including New York, Detroit,
and Baltimore, had even more significant declines in delivery times
during the pandemic. For example, on time performance in Baltimore was
close to 90% before the pandemic, but it fell to 42% on time in December
2020.

[Holly Hobbs:] Do we know why on time performance was down?

[Jill Naamane:] Yes. We talked to a number of stakeholders and they
cited a combination of factors. They mentioned reduced employee
availability because employees were sick with COVID, reduced access to
transportation, and also increased package volume. Packages are actually
much more labor intensive to handle than letters. And so it's harder for
the postal service to handle a surge in packages very efficiently.

[Holly Hobbs:] So the report says that while USPS's revenues increased,
they still lost money. How does that happen?

[Jill Naamane:] This is a good news and bad news story. The good news is
that the postal service saw increased revenue from higher volumes and
prices for packages. And even though packages are a small percentage of
all the mail, and are more expensive to handle, this was enough to more
than offset the decrease in the volume of letters. So the postal service
had a revenue increase in 2020 compared to 2019. But the bad news, is
that its expenses increased more than its revenue. So the USPS estimated
some of these expenses were directly related to the pandemic, such as
personnel costs due to overtime or employee leave due to COVID,
increased transportation costs because of reduced commercial air
service, and increased costs for personal protective equipment and
cleaning supplies.

[Holly Hobbs:] So the post office took some actions to reduce costs in
2020. Can you tell us a little bit about that?

[Jill Naamane:] One action that they took involved air transportation.
Postal service had been spending a lot on charter flights to get mail
from processing plants to the post offices to get it out for delivery.
And it was using these flights because of delays in its usual
transportation network. The Postmaster General attempted to cut some of
these costs by reducing these late and extra trips. But it was a pretty
controversial action, and it was put on hold so that the movement of
ballots for the general election last November would not be affected.
The postal service has some other actions planned. It aims to have the
organization breakeven in 10 years, and some of the actions that it has
to reduce its cost are adjusting delivery standards, and better managing
transportation. Some of the other planned actions involve congressional
legislation, such as changes to retiree health benefits. And it also has
ideas to increase revenues such as through pricing increases and growth
in package services. 

[Music]

[Holly Hobbs:] So it sounds like the U.S. Postal Service has experienced
several challenges during COVID-19, including a spike in mail volume and
staffing shortages. And while it serves a critical role in nationwide
communications and deliveries, it is confronting a number of financial
hurdles and an uncertain future. Jill, given the challenges USPS faces,
what questions should policymakers ask in order to address these issues?

[Jill Naamane:] We've actually done a few other reports that included
some suggestions to address the postal service's financial situation.
And we have some suggestions for Congress to consider. For example,
would we be okay with delivery of mail 5 days a week rather than 6 days
a week? There could be some cost savings for that, but Congress would
need to decide what the appropriate level would be for the country.
Another consideration that we offered was the extent to which the postal
service should be financially self-sustaining, or whether some of its
cost should be borne by the taxpayers. And finally, Congress should
consider what institutional structure the postal service should have.
Alternative structures could range from federal agency to a private
company.

[Holly Hobbs:] And last question, what's the bottom line of this report?

[Jill Naamane:] The bottom line is the postal service was already in
pretty serious financial trouble. It had 14 straight fiscal years of
losses. And although there was some growth in package volume and
resulting revenue from that, overall the trends of declines and other
areas was really exacerbated by the pandemic. And we think this makes
congressional action even more urgent.

[Holly Hobbs:] That was Jill Naamane talking about GAO's recent review
of the US Postal Service's performance and financial viability. Thank
you for your time, Jill.

[Jill Naamane:] You're very welcome.

[Holly Hobbs:] And thank you for listening to the Watchdog Report. To
hear more podcasts, subscribe to us on Apple podcasts, and make sure you
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