United States Postal Service Doubling Down on Mismanagement by Planning Expanded Grocery Delivery Service

On June 22, the United States Postal Service (USPS) announced that they wanted to expand their grocery delivery service to New York City.  This announcement comes on the heels of unanswered questions about previous attempts at grocery delivery service, a quarterly loss of $1.5 billion, and a plan to spend $6 billion on a new fleet of trucks.  Instead of trying to compete with the private sector to deliver groceries and buy new trucks, the USPS needs to get their fiscal house in order and focus on their core mission:  delivering mail.

Last October, the Taxpayers Protection Alliance submitted comments to the Postal Regulatory Commission (PRC) warning about expansion of grocery delivery without knowing the full fiscal impact of such a move.  In those comments TPA noted, “Perhaps even more startling, the USPS is near a point of financial collapse losing millions of dollars a day and billions of dollars every year. Earlier this month, the agency once again defaulted on their $5.5 billion pre-payment for their employee healthcare benefits. The USPS needs to definitively show that the previous 60-day test of grocery delivery services was successful and that the USPS did not lose money on this project. They should not be moving into new and unknown markets before understanding the possible consequences.”

After reviewing the program, the PRC regrettably permitted the expansion of the test. They did so while acknowledging that USPS still lacked adequate data about the costs to provide the service.  Each of the questions raised by TPA and the PRC on Customized Delivery are still pertinent in this round of expansion.

There are also concerns about the Postal Service’s desire to leverage its congressionally backed monopoly in order to intrude upon industry spaces where many private sector companies are already successfully providing value to customers.  Coupled with grocery delivery, USPS attempted a same-day delivery program for specialty items and gifts, which ended up earning only one dollar for every every ten dollars in expenses. Another area of expansion the USPS is considering is banking, despite the financial risks and diversion from its core mission of mail delivery.

A basic rule of successful economics is that before expansion, there should be an analysis of current results. The USPS has yet to make a financial case as to whether grocery delivery service expansion makes sense. Instead of expanding services (and expenses) beyond mail delivery, the USPS needs to institute management reforms to ensure a solid future. At the core of all of this, the best way for the Postal Service to get back on solid financial ground is to stick to the agency’s original mission of delivering the mail.