On March 4, Postmaster General David Steiner said the U.S. Postal Service has hired restructuring advisers to help map out contingency plans as the organization faces severe financial pressure. Steiner warned that, without changes, the Postal Service could run out of cash within a year and possibly face insolvency by early 2027.
USPS has endured persistent losses, reporting roughly $120 billion in cumulative net deficits since 2007. Much of the revenue erosion stems from a long-term decline in first-class mail - the Postal Service’s most profitable product - which has dropped to its lowest volume since the late 1960s.
To assist in planning for multiple scenarios, USPS retained the consulting firm Alvarez & Marsal on a short engagement, Steiner said. He framed the move as part of an effort to avoid last-minute crisis management.
"We are out of cash in 12 months if we don’t do anything different," Steiner said. "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?"
Steiner is slated to testify before the U.S. House of Representatives on March 17 to outline the Postal Service’s financial condition. He plans to make explicit the operational consequences of continued deterioration, including a stark example that without improvement there might be no delivery of Valentine’s Day cards in February 2027.
Volume declines have been steep. Steiner noted that USPS mail volumes are down by about 110 billion pieces per year from the peak reached roughly 15 years ago, a drop he said translates into approximately $86 billion in revenue at current prices. In its most recent financial release, USPS posted a net quarterly loss of $1.25 billion.
USPS has asked lawmakers and regulators for several forms of relief. The agency wants changes to obligations tied to the Postal Service Civil Service Retirement System, broader authority to set prices, and an increase in its statutory debt limit, which the agency reached some years ago at $15 billion.
"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," Steiner said.
On pricing, Steiner is seeking the ability to raise the first-class stamp above the current 78 cents. He believes consumers would accept a modest increase to 90 or 95 cents per letter, noting that many other countries have first-class rates of $2 or more.
Beyond policy changes, USPS has started commercial initiatives to generate revenue. In January, the agency launched an online bidding platform to solicit proposals for access to its last-mile delivery network. The platform opens more than 18,000 destination delivery units and local processing centers nationwide to a wider set of customers, with the goal of attracting new business and raising funds.
USPS currently delivers to over 170 million U.S. addresses six days a week. The last mile of delivery is the most costly component of the network, a structural challenge that also affects private parcel carriers such as FedEx, UPS and Amazon.com.
Legislative relief has come in the past. In 2022, Congress provided roughly $50 billion in financial assistance spread over a decade and required future retirees to enroll in a government health insurance plan. That legislation removed the requirement for USPS to pre-fund retiree health benefits for current and retired employees for a 75-year horizon - an obligation that no private business or other federal entity currently faces.
Steiner’s warning echoes concerns raised by his predecessor. Louis DeJoy told Congress in 2021 that the Postal Service faced a "death spiral" without meaningful reform.
Key developments and context
- USPS has hired Alvarez & Marsal for a short engagement to help plan for various fiscal scenarios.
- Steiner warned the agency could be out of cash in 12 months and may not be able to deliver Valentine’s Day mail in February 2027 without corrective measures.
- Operational and commercial responses include a new online bidding platform to monetize access to last-mile infrastructure and a push for pricing flexibility.
Sectors affected
- Logistics and delivery networks, including private carriers.
- Public finance and federal policy related to retirement and borrowing rules.
- Businesses and consumers dependent on reliable mail delivery and pricing stability.