Postmaster General (PMG) Louis DeJoy told Senate lawmakers Friday that the U.S. Postal Service (USPS) must be “liberated” from long-standing restrictions on how it prices products and services, claiming it has cumulatively lost about $80 billion just from the lack of rate flexibility to respond to changing market conditions.
In his first congressional testimony since becoming PMG June 15, DeJoy also said that USPS is studying ways to make its last-mile parcel services more profitable. There are areas where USPS could “push up” parcel rates, he said, adding that there are “reasonable business gaps that exist” that could be filled by more aggressive parcel pricing measures.
USPS late last week announced a series of peak-season surcharges on its band of parcel delivery products classified as “competitive,” meaning they aren’t monopolies like first-class mail. The surcharges, if approved by the Postal Regulatory Commission, the agency required to sign off on rate changes, would take effect Oct. 18 and run until Dec. 27. The levies would apply only to commercial users that meet high-volume thresholds. However, analysts have said the increases will be marked up and passed on to merchants, thus increasing their costs during their busiest time of the year. For big users like UPS Inc., by contrast, the surcharges could evolve into a strong profit center due to the expected pass-throughs.