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WASHINGTON (Reuters) — U.S. Postmaster General Louis DeJoy told lawmakers on Thursday that there are still "extreme delays" in some mail deliveries and that a 10-year strategic plan will revise existing service standards.
The U.S. Postal Service faces a $160 billion projected loss over the next decade and is looking to cut costs as it faces shrinking first-class mail volumes.
DeJoy told a hearing of the House of Representatives Appropriations subcommittee that the reorganization would keep existing six-day delivery and would not close rural or small post offices. But he acknowledged service standards will be relaxed as part of the plan.
The current standards are "not achievable," DeJoy said. "We cannot go to California from New York in three days without going on planes and we don't own planes."
Last week, USPS said it was offering early retirement to thousands of non-union employees as it consolidates postal districts in an effort to stem billions in red ink.
"We have a broken business model and changes need to happen," DeJoy said. "Our network is in bad shape ... We need to make some big changes."
Last month, DeJoy said the U.S. mail system is losing $10 billion a year and urgently needs reform and legislative relief. "I would suggest that we are on a death spiral," DeJoy said.
The USPS faces shrinking volumes of first-class mail, increased costs of employee compensation and benefits, and higher unfunded liabilities.
USPS reported net losses of $86.7 billion from 2007 through 2020. One reason is 2006 legislation mandating that it pre-fund more than $120 billion in retiree health care and pension liabilities, a requirement labor unions have called an unfair burden not shared by other businesses.
House Oversight and Reform Committee chair Carolyn Maloney has circulated draft legislation to address some USPS financial issues, including eliminating a requirement to pre-fund retiree health benefits and require postal employees to enroll in government-retiree health plan Medicare, for a saving of $40 billion to $50 billion over 10 years.
(Reporting by David Shepardson; editing by Jonathan Oatis and Grant McCool)
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