Summary: The U.S. Postal Service has engaged restructuring advisers to evaluate strategic options after years of sustained losses and steep declines in mail volume. Postmaster General David Steiner told Reuters the agency faces the prospect of running out of cash within one year unless it implements significant changes.
Adviser engagement and purpose - The Postal Service has hired consulting firm Alvarez & Marsal to assist in planning across different scenarios, Steiner said. The engagement is intended to help the agency map potential responses to its deteriorating financial position and assess options that could stabilise operations if current trends continue.
Financial background - The agency has recorded net losses of approximately $120 billion since 2007 as first-class mail volumes have declined to levels not seen since the late 1960s. Mail volumes have fallen by 110 billion pieces per year from their peak 15 years ago, a contraction that translates into $86 billion in lost revenue at current prices. Last month, the Postal Service reported a net quarterly loss of $1.25 billion.
Steiner delivered a stark assessment of the timeline facing the agency: "We are out of cash in 12 months if we don’t do anything different," he said. He added, "I do not want to be in a position where we’re six weeks out from running out of cash, and we say, Oh heck, what are we going to do?"
Requests to policymakers - The Postal Service has asked lawmakers and regulators to take a range of actions, including reforming the Postal Service Civil Service Retirement System obligations, granting more pricing flexibility, and raising its $15 billion statutory debt limit, which the agency reached years ago. Steiner said these reforms are part of what the agency needs to avoid an acute liquidity crisis.
On the possibility of outside assistance, Steiner said: "If we can’t get help from the outside, from either our regulator or from Congress on the debt limit - everything’s got to be on the table."
Pricing authority and international comparison - Steiner is seeking the power to increase first-class postage above the current 78 cents. He suggested Americans might tolerate increases to 90 or 95 cents per letter and noted that comparable services in many other countries cost $2 or more.
Congressional testimony and timetable - Steiner is scheduled to appear before the U.S. House of Representatives on March 17 to outline the Postal Service’s financial condition. He intends to warn lawmakers that without improvements, routine deliveries such as Valentine’s Day cards could be at risk by February 2027.
Key points:
- The Postal Service has engaged Alvarez & Marsal to plan responses to its financial challenges.
- The agency has accumulated about $120 billion in net losses since 2007 amid a long-term decline in first-class mail to levels not seen since the late 1960s.
- USPS has asked for pension obligation reform, pricing flexibility, and an increase to its $15 billion debt limit.
Risks and uncertainties:
- Liquidity risk - The agency could run out of cash within 12 months if no meaningful changes are implemented, creating immediate operational strain for mail delivery services.
- Policy and regulatory uncertainty - Outcomes depend on actions by Congress and regulators regarding pension obligations, debt limit adjustments, and pricing authority.
- Revenue risk from volume decline - Continued declines in mail volumes (110 billion pieces per year from peak) have already created substantial revenue losses, and further declines would deepen financial shortfalls.