The USPS 10-Year Plan: What to Expect in 2024 and Beyond

The United States Postal Service‘s (USPS) 10-year turnaround plan is now entering year three. Dubbed "Delivering for America," this ambitious strategy aims to staunch financial losses at the USPS through upgrades and revenue growth.

Let‘s review the goals, major changes, progress so far, and what customers can expect in 2024 and beyond.

What Were the Main Drivers of USPS Financial Troubles?

Before we dive into the details of the 10-year plan, it helps to understand why such dramatic change is deemed necessary at the USPS. The major factors behind over $100 billion in losses since 2007 include:

• Prepaid retiree benefits: The USPS was saddled with a unique requirement by Congress to pre-fund decades‘ worth of pension and healthcare benefits for postal retirees. This costs USPS over $5 billion per year.

• Mail volume decline: First-Class Mail volume has dropped nearly 40% since 2008, as digital communication replaces letters.

• Old infrastructure: Outdated processing plants, delivery vehicles, and other infrastructure has strained efficiency.

USPS Leadership Cites Need for Change

Breaking Down Key Elements of the 10-Year Plan

The USPS plan contains customer-facing changes and internal operational changes aimed at cutting costs while also driving new revenues.

Here are the major strategies, per the original 2021 plan:

• Invest $40 billion into facilities upgrades, new vehicles, enhanced mail processing equipment, and other infrastructure modernization
• Expand package delivery services to generate $24 billion per year in new shipping revenue
• Slow USPS delivery speed standards to improve efficiency and cut transportation costs
• Support congressional repeal of the retiree healthcare prepayment requirement
• Stabilize finances to break even by 2023

Table 1. Key Strategies of USPS 10-Year Plan

USPS 10-Year Strategic Plan Summary

Assessing Progress Halfway Through 2023

As we near the middle of 2023, the USPS turnaround plan is making gradual moves toward financial viability but still has a long road ahead.

Here are some updates on its progress:

• New, higher USPS pricing took effect in January 2023 to drive revenues. Expect continued price hikes for shipping and mail over the decade.
• Delivery speed has slowed down by 1-2 days on average as new efficiency-focused standards roll out. More lead time will be the norm.
• USPS posted lower mail volumes but higher revenue and smaller losses in 2022 – a step in the right direction.
• Major facility consolidations and upgrades coming in 2024-2025 period to better handle packages.

So far, changes for customers have been moderate. But we can expect a shift towards slower and more expensive Postal Service shipments and mail over the next 7+ years of transformation.

On the plus side, the billion in facility upgrades and new vehicles should allow USPS to meet growth in ecommerce packages. Maintaining affordable daily mail delivery to every address also remains a priority.

What Should Customers Expect Through 2030?

Assuming plans stay on track through the 10-year timeframe, residential and business customers can expect:

• Continued price increases of about 2-3% annually on shipping services, PO boxes, and other USPS products
• Potential Post Office hour reductions and more self-service kiosks in some locations
• Ongoing relaxation of delivery speed standards – a 2-4 day timeframe for most First-Class letters and packages
• Improved package tracking and enhanced visibility into mail status via USPS online dashboard

On the positive side, upgraded facilities, vehicles, and operations should allow USPS to handle projected package growth. And of course daily mail delivery would continue across the country.

But the days of speedy 1-3 day service and rock-bottom USPS pricing may be numbered as the agency focuses on righting the ship.

The Billion Dollar Question: Will the Plan Work?

Can the USPS 10-year plan achieve its goals of financial stability and operating excellence? I believe the jury is still out:

Pros:

• Package shipping revenues are growing 15-20% annually – a bright spot
• USPS has room to cut $10B+ in annual costs through modernization
• New leadership seems urgently focused on stemming billions in yearly losses

Cons:

• Mail demand projected to shrink further, limiting revenue upside
• Political gridlock makes policy changes like pension reform an uphill battle
• $190 billion in obligations weighs heavily on USPS balance sheet

In my assessment, the plan will partially deliver the desired results. Significant parts like infrastructure upgrades and package business growth could succeed.

But items requiring legislative cooperation around retiree benefits face doubts without major reforms. And further declines in profitable mail could continue dragging finances down.

The next 2-3 years remain crucial for measuring the plan‘s initial effects. Stay tuned on if USPS can deliver on its 10-year financial and service promises to America.