Trump Administration Recommends Postal Reforms that Could Raise Package Shipping Rates

The Trump administration on Tuesday called on the U.S. Postal Service (USPS) to make sweeping reforms that could raise shipping rates for certain packages. The administration’s USPS task force said in a new report that the changes are needed to bring in more revenue for the cash-strapped Postal Service, which reported $3.9 billion in losses in fiscal 2018.

The Treasury Department-led task force said the Postal Service should be able to charge higher rates for e-commerce goods and other packages deemed “nonessential,” which are a fast-growing part of the USPS’s business.

The report recommends mail and package shipments be divided into essential and commercial service categories. Many online retail shipments would fall into the latter category, which would not be protected by existing price caps and thus be subject to rate increases.

It also calls on the USPS to redefine what should be covered by the universal service obligation, which requires the Postal Service to deliver everywhere in the U.S. Under the administration’s proposal, most commercial packages would not be covered by that obligation.

The report was not limited to package policies and covered several other areas where the task force believes the USPS could shore up its finances.

It called on the Postal Service to restructure massive prepayments of employee retirement and health benefits, which business groups say is the main driver of its fiscal woes. But it stopped short of endorsing bipartisan legislation that would dramatically scale back the prepayments, saying that doing so would place too much of a burden on taxpayers.

The task force is also recommending that the USPS strengthen its internal management, giving more power to the board of governors to set fiscal targets and allowing the PRC to enforce stricter rules if the goals are not met.

It declined to endorse privatizing the Postal Service, a proposal that was initially floated by the administration earlier this year as part of a broader plan to reorganize the federal government.

Senior administration officials say the Postal Service and Postal Regulatory Commission (PRC) would be able to change package rates without an act of Congress.