Postmaster General DeJoy Defies Critics, Leads USPS Forward In Digital Era

Appointed In Toxic Political Environment, He Brings Stakeholders Together. But What Will It Cost Mailers?

From MAIL Magazine’s NPF Show Newspaper:

The scenes of protestors outside newly-appointed Postmaster General Louis DeJoy’s home demanding his resignation was one of many different protests Americans saw on their screens in 2020.

Fact is, it is not uncommon for people to protest PMG’s. Back in 1991 a WANTED POSTER with PMG Anthony Frank’s photo was distributed to post offices nationwide by angry union members.

But this was a little different.

The first outside leader of the U.S. Postal Service to be appointed in 23 years was taking over in the middle of a pandemic and the havoc it caused; with tens of millions voting by mail and many times more doing all their Christmas shopping online.

In between hostile congressional appearances, media attacks, and court challenges, DeJoy managed the USPS to pull off a successful election mail season. As for the holidays, it was a disaster.

Widespread network outages — exasperated by employee illness — were experienced, especially hammering printers and direct mailers who rely on holiday sales.

To make matters worse, UPS and FedEx refused to accept customer packages once their private networks were maxed out. This forced volumes onto the postal system it obviously was not able to handle.

“The industry’s faith and confidence in the USPS to perform is critical …” said Joel Quadracci, CEO of Quad, Inc. in February 2021 congressional testimony. “… and, unfortunately, the industry’s confidence in USPS has been shaken.”

One Year Later

It’s quite remarkable where PMG DeJoy and the USPS are, just one year later.

Notably, the Postal Service Reform Act was signed into law (click here). The USPS will no longer have to prefund retiree health benefits, an onerous obligation weaved into the last postal reform law in 2006.

But for this prefunding requirement, the USPS would have posted profits instead of losses in some quarters. The last three PMG’s complained mightily, but were not able to get the changes needed through Congress.

And DeJoy did. He had help in that the same glaring spotlight on him and the USPS also focused congressional attention to the misguided 2006 law that hobbled the Post.

But he also did it by winning the trust of the postal unions, Board of Governors, and senior postal executives.

He did it by promoting a 10-Year Plan and implementing core tenets — the new reform law being at the center of them.

Skeptical mailers will point out that he also pushed through lower delivery service standards — though the jury is out on the actual impact of these changes. Early 2022 data shows mail being delivered faster, especially flats.

Accomplished Executive

When the Board of Governors appointed Louis DeJoy the 75th Postmaster General, they ended 23 years of in-house rule.

For two decades of the 21st century the U.S. Postal Service was run from within, promoting the PMG from its ranks.

But for the two centuries prior to the current one, the Postmaster General was an outsider from the business or political world, appointed by the President (and, starting in 1971, by a Board of Governors appointed by the President and confirmed by the Senate.)

DeJoy brings more than 35 years of business and logistics experience. As Chairman and CEO of New Breed Logistics, DeJoy spent decades in collaboration with the U.S. Postal Service, Boeing, Verizon, Disney, United Technologies and other public and private companies to provide supply chain logistics, program management and transportation support.

The value of having a logistics expert head the Postal Service was obviously on the minds of a Board faced with updating and repurposing postal infrastructure for the digital age.

What Will It Cost Mailers?

The 2006 postal reform law hobbled the Post in another way: it limited its pricing power to the rate of inflation. When the Great Recession hit in 2008, a ten year period of low or no inflation ensued. Mailers enjoyed low, single digit increases.

Those days are over. Under DeJoy, the USPS will now raise rates twice a year. Rate increases take effect July 10 (there was no increase in January) and new rate hikes will be announced for January 2023. Taken together, it could spell double-digit, annual rate hikes.

If true, the USPS will be mirroring its private sector competitors FedEx and UPS, who religiously have raised rates every year for the last twenty years (not to mention surcharges).

Is that where we’re headed?

Or, will the first outside PMG in 23 years be able to move the Postal Service forward with mailers, and not on the back of mailers?

The new Postal Reform Act could go a long way in quenching the thirst for more revenue. Given the last two years of DeJoy’s determined leadership, mailers have reason to be optimistic.