Newspaper: Trump to order hostile takeover of US Postal Service

Move to consolidate executive branch authority over mail agency seen as possible precursor to privatization

President Donald Trump plans to remove the leadership of the U.S. Postal Service and take away the agency’s independent status by placing it under the direct control of the White House, which poses a risk for disruption of mail and parcel delivery, according to exclusive reporting by The Washington Post.

The newspaper, citing six anonymous sources, said the Postal Service’s board of governors is prepared to contest a hostile takeover in court, and postal experts said such a takeover would probably be illegal.

Trump will issue an executive order within days putting the Commerce Department in charge of the Postal Service, The Washington Post said. Some policy observers see that as a first step toward privatizing the nation’s mail carrier. Before taking office, Trump expressed interest in making the Postal Service, which employs more than 533,000 people, a private enterprise. 

Such an action would align with an executive order on Tuesday aimed at consolidating power that would require independent agencies like the Securities and Exchange Commission, the Federal Communications Commission, the Federal Trade Commission and Consumer Protection Safety Commission to submit proposed regulations to the White House for review. The order also orders agency heads to submit any strategic plans to the Office of Management and Budget and for OMB to review the agencies’ spending to ensure it fits with the president’s priorities.

A clue that change was afoot at the Postal Service came Monday when Postmaster General Louis DeJoy notified the board he planned to resign. The announcement was a surprise because DeJoy, a Trump donor in 2020, was hired during the first Trump administration by a postal board made up of Trump appointees and is in the midst of a 10-year campaign to modernize the money-losing agency and strip out $4 billion in annual costs.

Trump’s ability to execute a postal power grab could be enabled by filling several vacancies on the board of governors. The board selects the postmaster general, subject to confirmation by the U.S. Senate.

Last month, the Post reported that Trump was looking for candidates to replace DeJoy even though the president doesn’t have direct authority to fire him.

A Postal Service spokesperson did not respond to a FreightWaves request for information. A White House media official told the Washington Post after the story was published that no executive order regarding a Postal Service capture was planned. 

“If this reporting is true, it would be an outrageous, unlawful attack on a storied national treasure, enshrined in the Constitution and created by Congress to serve every American home and business equally. Any attack on the Postal Service would be part of the billionaire oligarch coup, directed not just at the postal workers our union represents, but the millions of Americans who rely on the critical public service our members provide every single day,” Mark Dimondstein, president of the American Postal Workers Union, said in a statement.

“The public Postal Service is the low-cost anchor of a $1.2 trillion mail and shipping industry, which supports more than 7 million jobs in communities across the country,” he added. “Efforts to privatize the Postal Service, in whole or in part, or to strip it of its independence or public service mission, would be of no benefit to the American people. Instead, it would drive up postage rates and lead to reduced service, especially to rural America.”

John Costanzo, a parcel and freight transportation consultant, agreed in a phone interview that the postal board may need some revamping but wasn’t sure how the agency would function under the Commerce Department.

He predicted large mailers who are used to huge taxpayer-subsidized discounts for bulk mail flyers will complain the loudest about any transfer of power.

“I think one of the outcomes of this might be a relook at that kind of archaic system, and you’ll hear a lot of screaming by direct marketers and periodical companies,” Costanzo, who runs advisory firm LDK Global, said. 

He endorsed the idea of making the Postal Service a private company, pointing to the successful privatizations of national mail carriers in the Netherlands, Germany and the United Kingdom.

“Technically, they are a private corporation, but they have no latitude to do anything. So if they get that change, that’s a good thing,” he said.

DeJoy defends policies

The uneven rollout of Delivering for America, as well as insourcing of parcel delivery handled by couriers and rising prices for stamps and packages, has generated criticism. Large retailers that use the postal network say DeJoy’s strategy should be reevaluated, especially rate hikes for last-mile package delivery that have motivated FedEx and UPS to self-handle economy packages rather than inject bulk shipments at destination postal centers.

The Postal Regulatory Commission (PRC), which oversees the agency’s service and rates, recently questioned the effectiveness of DeJoy’s transformation initiatives, saying they are negatively impacting service for certain products and rural communities, and that cost savings are overstated.

On Thursday, DeJoy pushed back on the PRC’s opinion about changing service standards. 

“I was confounded by the Commission’s dismissal of cost savings of nearly $4 billion a year as ‘meager,’ while characterizing service standard changes that are carefully designed and modest in impact within the current service standard day ranges as a ‘severe degradation’ in service that must be avoided at all costs,” DeJoy said in a response cover letter to PRC Chairman Michael Kubayanda.

“The PRC presents a completely one-sided narrative that unjustifiably ignores or dismisses as unlikely to occur all of the positive benefits of the proposal; at times misrepresents or misunderstands the Postal Service’s plans; and characterizes the service impacts in a way that lacks any sense of context or proportion,” the Postal Service said in its 34-page response. “The Postal Service’s legacy transportation and processing networks are highly inefficient, and therefore stand in the way of the achievement of … statutory obligations [for prompt, reliable and efficient service.] Much of this inefficiency is dictated by the Postal Service’s current service standards, and specifically the fact that those standards do not account for the time and effort needed to transport end-to-end mail and packages from the origin retail facility to the processing network; instead, the standards only reflect the distance between the origin and destination processing facilities.”

DeJoy argued the agency is operating a large number of trips from local post offices to sort centers with mostly empty trucks, which wastes money and adds to carbon emissions. The intent is to downgrade a minority of volume to a lower standard that adds an extra day to the delivery process for single-piece First Class mail originating in areas far from processing centers so that more volume can be accumulated for each truck trip to improve efficiency. The standards would still aim for final delivery within two to five days.

Postal Service management insisted the proposal is not “speculative” but reflects achievable operational strategies “which will lead to more cost-effective, precise, and reliable operations. Characterizing $4 billion in annual savings as ‘meager,’” Postal Service management said, “is nothing short of astonishing.”

DeJoy acknowledged that sweeping changes have led to temporary service disruptions in some areas, but said the best response is make adjustments based on lessons learned rather than giving up. He said the PRC had some positive suggestions that his team will adopt as part of its reform effort.