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Reeling Postal Service Faces Coronavirus Financial Headwinds (1)

April 4, 2020, 1:44 AM; Updated: April 4, 2020, 4:20 PM

The U.S. Postal Service is facing “a rapid drop in mail volumes and a significant loss in needed revenues” because of the novel coronavirus that could lead to a halt in mail delivery, a spokesman said.

Though the $2 trillion stimulus (Public Law 116-136) signed by President Donald Trump last month included a $10 billion line of credit for the Postal Service, the USPS is concerned this isn’t sufficient “to withstand the significant downturn in our business that could directly result from the pandemic,” spokesman David Partenheimer said Friday.

“Under a worst-case scenario, such a downturn could result in the Postal Service having insufficient liquidity to continue operations,” Partenheimer said. This could affect “access to communications and essential packages such as prescription drugs,” particularly in rural areas, he said.

The Postal Service can’t share exact numbers on the drop in mail volume ahead of approval of its next quarterly report by the USPS Board of Governors, Partenheimer said. The board is meeting in early May to discuss the most recent financial results and they’ll be publicly available after that meeting, he said.

Without additional funds, the USPS will run out of money by late June or early July, said Ronnie Stutts, president of the National Rural Letter Carriers Association, which represents about 130,000 postal workers. What’s needed is the $25 billion in cash that was stripped from the House version of the stimulus bill when it reached the Senate because of pressure from the White House, Stutts said. House Democrats are looking to again include the money in the next stimulus bill, he said.

The Trump administration supports the Postal Service but it’s not willing to allow the status quo to continue by providing no-strings-attached money, a senior administration official said.

The service has been defaulting for years on billions of dollars in required payments toward its future retiree health liabilities, the official said. The administration’s “commonsense reforms” for the Postal Service include changing how rates are set for products deemed to be outside its universal service commitment and making services currently performed by the USPS available at retail outlets such as Walmart, the official said. These changes are opposed by many of the same people who now want more stimulus money for the USPS, the official said.

“The Postal Service is a priority, and that’s why it got the $10 billion” line of credit, the official said.

With about 634,000 mostly union-represented workers, the service is the hub of the U.S. mailing industry and the roughly 7.5 million jobs it supports. The USPS reported a net loss of $8.8 billion in fiscal 2019 and lost another $748 million during the first quarter of fiscal 2020, which ended Dec. 31. Postmaster General Megan Brennan, who planned to retire Jan. 31 before delaying her retirement to allow the Postal Service to find a new chief, told Congress last April that the service will run out of money by 2024 without action from federal lawmakers.

Praise for USPS Response

Stutts and Paul Hogrogian, president of the National Postal Mail Handlers Union, in separate interviews said Brennan and the USPS are working to ensure continued mail delivery and employee safety during the coronavirus crisis.

“They are doing everything they can” to protect employees, including providing protective equipment and allowing employees who are sick or who need to take time away from work to care for family members to stay home, said Hogrogian, whose union represents about 47,000 USPS workers.

The Postal Service has “hundreds of thousands” of bottles of hand sanitizer available now and another 600,000 bottles will be arriving during the first half of April, Stutts said. The USPS also has about 15 million masks on hand to protect employees, he said. Rural letter carriers who don’t believe they’re being properly protected should contact the union immediately, Stutts said.

According to information sent to postal unions Friday, 4,420 postal workers have been affected in some way by the coronavirus, including those in self-imposed or mandatory quarantine and 294 employees who tested positive, Stutts said. The Postal Service has about 630,000 employees and the people who tested positive for Covid-19 weren’t necessarily exposed on the job, he said. The numbers for rural letter carriers are much smaller—14 have tested positive, Stutts said.

Though many rural carriers are close to their customers, Stutts implored the public to be safe in their interactions.

“That’s what we want to relate to the American people. Please keep your distance from the rural carriers,” he said.

(Updated with comments from an administration official in 6th paragraph. )

To contact the reporter on this story: Louis C. LaBrecque in Washington at llabrecque@bloomberglaw.com

To contact the editor responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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