This Weekly Update is a little different.  We will be focusing on one particular issue, the United States Postal Service (USPS) and going in depth with some charts because two things happened this week: the House of Representatives passed the Postal Service Reform Act and the USPS announced a $1.5 billion loss for the first quarter of fiscal year 2022.  I do want to point out that TPA hit the road and testified in a few states this week.  Lindsey Stroud and Martin Cullip testified in Arizona, Hawaii, and Maine about vaping bans.  Patrick was in Arizona testifying about app security, In part, Patrick’s testimony read: By overseeing in-app payments, consumers enjoy incredible protections. Centralized tracking and management of app subscriptions allows consumers to see and cancel all their subscriptions in one place. Ask-to-buy protects families against children making accidental or unapproved purchases within apps by alerting the account holder. Most importantly of all, by overseeing in-app payments, store operators can protect their customers from credit card fraud. If a stolen credit card is used and flagged in one app, standardized in-app payment systems can stop purchases anywhere within the managed app store ecosystem. HB 2662 upends the ability for Apple, Google, and other store operators from standing with their customers and protecting their purchases. The legislation transforms app stores from secure digital department stores to online flea markets.”  Read the whole testimony here.

 
The agency continues this troubling trend by reporting that it shed another $1.5 billion in the first quarter of fiscal year (FY) 2022. This disturbing news comes at the same time that Congress prepares to vote on H.R. 3076, the Postal Service Reform Act of 2021.  While H.R. 3076 contains some commendable proposals such as mandating more performance data tracking, it fails to adequately address the underpricing of packages. And, as the current net loss figures show, even an influx of revenue from packages during the last three months of the year (corresponding to the holiday season) is not enough to offset the high fixed and variable costs associated with parcel deliveries.  Packages have taken up an increasing share of the overall mail haul, comprising nearly 60 percent of delivery weight in FY 2021. But interestingly, real revenue per package pound shipped has decreased in recent years.


This needn’t be a cause for concern if revenues were nonetheless covering costs and delivery costs were declining (perhaps due to increased delivery efficiencies). Unfortunately, it appears that revenues are not in fact covering costs due to misguided agency cost attribution calculations. For example, the agency only attributes 10 percent of the costs of city carriers’ street activities to competitive products (i.e., packages) and 0 percent of headquarters expenses to packages. The latter figure is particularly implausible, given that headquarters staff regularly draft reports on package deliveries and negotiate agreements with e-commerce companies to deliver packages.

Have a great weekend!