Postal service obtains favorable borrowing conditions in stimulus bill
The combined COVID-19 stimulus and government funding bill passed by Congress on Monday evening effectively cancels a $ 10 billion loan made to the United States Postal Service under the CARES Act enacted in late March, according to one person. close to the file.
Lawmakers accepted wording in the Consolidated Appropriations Act of 2021 that would convert the Treasury Department loan into a grant. This means that the postal service would not need to repay the loan while keeping the money. We do not know if this is the only provision of the bill that affects the postal service. The Postal Service, which has around $ 15 billion in cash, is believed to have never used the line of credit. Agency officials did not respond to requests for comment.
The over 5,000-page bill combines $ 892 billion in COVID aid with $ 1.4 trillion in additional spending to fund federal agency budgets through next September and prevent a government shutdown in end of year. President Donald Trump has attacked the legislation for failing to provide qualifying American adults with a one-time payment greater than the $ 600 approved by lawmakers.
Trump did not say he would veto the bill. However, his huge margin of support in both houses made it likely that Congress would have two-thirds of the votes necessary to override any veto.
Kevin Kosar, who follows the Postal Service as a resident researcher at the American Enterprise Institute, a public policy think tank, said in an email Wednesday that the grant money would be deployed quickly to repay the most of the postal service’s $ 14 billion debt. Paul Steidler, a senior researcher at the Lexington Institute, another think tank, wrote in a Dec. 4 editorial that the Postal Service has so much cash it doesn’t need to resort to additional borrowing authority for at least a year. .
Steidler’s article strongly criticized efforts to provide direct relief funding to the Postal Service. Steidler said the agency would be better served to focus on its “serious and chronic financial problems than on those that need to be resolved.” He cited the steps needed for the postal service to improve the way it costs and rates its services.
The postal service has had perhaps the most trying year in its long history. Mail volumes collapsed after the pandemic hit, with parcel deliveries linked to an increase in e-commerce orders being the only bright spot. Costs skyrocketed as the agency spent huge sums to protect the hundreds of thousands of workers processing and delivering letters and parcels during the crisis. New Postmaster General Louis DeJoy came under massive fire for making operational changes months before the Postal Service was supposed to handle tens of millions of postal ballots for the November 3 general election.
The postal service became political football in 2020. In August, House Democrats proposed an emergency injection of $ 25 billion in cash to keep the agency alive and ensure a smooth postal voting process. Meanwhile, Trump has repeatedly threatened to veto any relief bills that contain direct funding unless the Postal Service quadruple its shipping rates. Trump argued that large postal customers like Amazon.com Inc. (NASDAQ: AMZN) enjoy extremely low rates. Trump’s demands, which never progressed, were seen as an attempt to retaliate against Amazon founder Jeff Bezos for allegedly unfavorable coverage Trump received from the Washington Post, which Bezos owns.
Although the Postal Service has largely disappeared from the political radar, it remains very visible in the lives of Americans waiting for their holiday deliveries. Millions of packages may not reach their destination by Christmas Eve as the agency grapples with massive volumes and an understaffed workforce – due to thousands of employees being put away after testing positive for coronavirus or from associates quarantined because they came in contact with affected workers.
Parcel traffic increased due to the holiday season, the impact of COVID-19 on e-commerce demand, and new demands from large shippers that had been cut by FedEx Corp. (NYSE: FDX) and UPS Inc. (NYSE: UPS) because their volumes had exceeded previously agreed limits. An early winter storm that hit the northeast, mid-Atlantic and New England didn’t help matters. Every private parcel carrier has been operating at full capacity for weeks, leaving the postal service as the last viable option for many shippers and retailers.
The postal service delivered 93.6% of packages on time during the week ending last Saturday, according to data released Wednesday by consulting firm ShipMatrix. The agency’s Parcel Select service, in which it accepts bulk parcel offers as deep into its shipping network for last mile deliveries to residences, recorded a punctuality rate of 98.7%, said ShipMatrix.
The lower overall figure indicates that the Postal Service has fallen behind in delivering the packages it processes from start to finish. Analysts expected end-to-end deliveries to be the weak spot due to increased demand and staffing issues affecting its entire network. Priority mail, the well-known postal service delivery product of two to three days, and first-class parcel service, in which packages weighing less than 1 pound are delivered in one to three days, are the two main products. of its door-to-door service. delivery wallet.
ShipMatrix President and CEO Satish Jindel said over a million online orders might not arrive on Christmas Day, but most of those orders contain COVID-19 related household products and not holiday gifts.
A survey by last mile IT vendor Convey paints a less favorable picture. The average transit time for packages shipped by the Postal Service fell to 8.15 days for the week ending last Thursday, from an average of 3.58 days in the week leading up to the Black’s online shopping day. Friday, Convey said. The agency’s punctuality fell to 55% last week from 89% the same week last year, Convey said.
The drastic increase in volumes was the main culprit, according to data from Convey. The share of postal services in e-commerce parcel shipments rose to 24% last Thursday, from 9% in the week of October 9.
Convey, based in Austin, Texas, said its data is “based on tens of millions of packages shipped from more than 500,000 locations in the United States across the company’s customer base.”
(An earlier version said Trump threatened to veto the bill. Although he expressed serious objections to the bill, he did not explicitly say he would veto it.)