The Stimulus Package Includes Billions for the USPS … Here’s Why it Matters

The $2 trillion dollar federal Cares Act helps workers, smaller businesses and industries survive the current pandemic. And the USPS is getting some relief as well, according to Al Root in Barron’s.

“The government wants to ensure mail and packages keep flowing during this unprecedented period of economic pause. It’s a necessary step given that logistics providers are the lifeblood of any economy,” Root notes, explaining the $10 billion in loan funds earmarked for the postal service.

The USPS explains that, as Americans stay home, the mail becomes more important than ever.

“As Americans are urged to stay home, the importance of the mail will only grow as people will need access to communications and essential packages such as prescription drugs and other necessities,” the USPS said in a statement. “This is particularly true in rural and other areas.”

Meanwhile, Root notes other national post carriers like Germany’s Deutsche Post are reserving the right to “modify services,” due to lack of carriers. And this could delay international shipments.  Clearly, supporting our postal service is necessary, especially now. Yet USPS officials are saying the $10 billion may not be enough.

“The Postal Service remains concerned that this measure will be insufficient to enable the Postal Service to withstand the significant downturn in our business that could directly result from the pandemic,” a post office representative told Barron’s in an emailed statement. “Under a worst-case scenario, such downturn could result in the Postal Service having insufficient liquidity to continue operations.”

Root notes a valid point that does hamper the USPS’s efficiency in the current crisis.

“The post office has a universal service mandate, and it costs the same to mail a letter to a rural community as it does to mail one in densely populated urban areas,” Root explains. “That pricing reality is one of the constant tensions the post office has to live with and manage through. The USPS doesn’t get to set the price for a stamp either. Congress, effectively, does that. The USPS can negotiate rates for parcel delivery with businesses, but its pricing situation is unique in American logistics industry.”

We often point out the financial struggles and strategic blunders of the powers that be who oversee our national mail. We are no fans of waste, bloat and government mandates that hamper cash flow. But let’s remember this is not a bailout; it’s a loan. And we need to keep the mail moving.

That said, partnerships with tightly managed companies like FedEx and UPS may help shore up the USPS and get us through the next few months. Until then, we support the postal workers bringing our mail every day, and we will continue to do our part to work with the USPS to assure our customer deliveries continue.