Saving the USPS in Election Years
What a difference a year makes.
Back in Jan. 2009, mailer industry groups chafed at the idea of the U.S. Postal Service cutting out a mail delivery day as a means to save money. To see what they said then, click herehttp://directmag.com/mail/0130-mail-groups/index.html\
Now they’re willing to accept one less delivery day if the USPS can make good on its claims that cutting out Saturday delivery will indeed save it $3 billion a year.
Earlier this month, the USPS reported a net loss of $297 million for the quarter ended Dec. 31 and standard mail volume of 45.7 billion pieces, an 8.9% decrease from 50.2 billion in the prior year. And these trends show no sign of letting up.
Given all this, the USPS says it could become insolvent if it doesn’t get this relief and there’s good reason to believe them. Maybe that’s why Postmaster General Jack Potter has been so relentless in pushing for five-day delivery.
But will Congress go along with cutting back on mail delivery especially during an election year and when the public at large probably has no idea about USPS fiscal woes?
Nobody thinks it will.
So the best the USPS can hope for is for Congress to take up this cause in 2011. But is that likely just before the 2012 Presidential election?
What’s really going on here involves paying for healthcare costs and nobody in Congress apparently wants to do that now for anybody under 65.
The Postal Accountability and Enhancement Act of 2006 probably could not have passed without the provision that the USPS prepay $5.4 billion back to the U.S. Treasury to cover the healthcare costs of retired employees every year until 2016.
That’s a crushing burden for any enterprise to bear, no matter its fiscal health.
And even if the USPS does get its way with cutting out Saturday delivery, that will still leave it with $2.4 billion to pay for retired employee healthcare.
Of course, cutting out Saturday delivery does carry the risk of making mail seem less relevant, which is why many in the industry first opposed the idea and may still deep down even if they’re are resigned to the practical realities of USPS fiscal health.
What’s likely to happen?
A cynic would look at what happened last October when President Barack Obama signed legislation cutting the USPS’s $5.4 billion healthcare obligation down to $1.4 billion for this fiscal year and expect more of the same going forward.
That move gave the USPS $4 billion for routine operating expenses with the balance to be paid later
But bandaid fixes like this sure as hell aren’t going to do anything to keep the industry, if not the country alive.
February 23rd, 2010 at 2:03 pm
Its funny that Fedx and UPS can make money and the post office can’t stay out of the red. I blame the managment which runs the Post Office for this. Let’s see how upper mamagment would work if they had to make a profit. There is a lot of wasted money and wrong doings fire from the top and work the way down like every company has to do to get out of the red. Everyone that gets cut are the least amount that get paid. I would like to know how many bosses are there per employee that works delivering.Cut from the top and not the bottom and get out of the RED
February 23rd, 2010 at 2:36 pm
no company or no corporation have to prefund the future retireee health benefit of 5.4 billion while still funding current retiree benefit and current employees benefit , it doesn’t make any sense that usps is up to date with retiree health benefit every year, why they have prefund future retiree, it is like put money in the treasury and never use it, cause usps is always paying current retiree. it is like taking 5.4 billion dollars out of ups bottom line and see if it can make a profit.
February 23rd, 2010 at 3:25 pm
WHERE’S THE 75 BILLION OVERPAYMENT?????????
February 24th, 2010 at 12:32 am
what happen to the $75 billion that the postal service over-paid to civil service?
February 24th, 2010 at 1:27 am
I still feel management staffing is probably on the heavy side. Most corporate
management structures are 12% or so. USPS mgmt staffing closer to 23% -
cut that in half and we can deliver 7 days a week no problem - thanks
February 24th, 2010 at 10:10 am
Saving the Postal Service is not about bailouts or worker reductions. It is about an extremely top heavy supervisory force which does nothing except create stress nd busy work to justify its existance. The ratio of bargaining unit worker to supervisor is approaching 4:1. No industry can survive with such a concentration of administration. The USPS is micromanaging from HQ and Region anyway leaving absolutely no need for the may layers of managers. The US Postal employee has long ben the most productive in the world. However, unnecessary verpriced machinery and administrative managers have negated that productivity. Of course UPS and Fed EX are profitable. The USPS is working hard every day to snd them business. Did you know that Fed EX has the major contract to move first class and priorityail? That is like McDonld’s asking Burger King to provide their ground beef.
February 24th, 2010 at 3:29 pm
The Postal Service’s infrastructure (32,740 post offices) was established when it was the one-and-only way for citizens to communicate with government and businesses.
Today, Internet culture has turned the page, yet, USPS is the only entity that can/will provide universal, secure connectivity nationwide at reasonable rates. (Email is not “free” or “green” in spite of the myths you hear.) Without USPS, rural areas would (do) pay exhorbitant fees to receive shipping from for-profit organizations like UPS and FedEx.
USPS also adds 1.8 million new delivery points to their network annually due to population growth. These are a few other things that prevent USPS from prospering, plus the fact that only laws passed by Congress can close a post office, cut days of delivery or change the requirement to prefund future retiree health benefits.
February 25th, 2010 at 1:26 am
The post office is outdated. With the $100 laptop on the horizon, the postal service should be disbanded.
In 1875 the Pony Express offered a service. For $5.00 (a weeks salary back then) they would deliver a letter (one ounce) from St Joseph Missouri to San Francisco California. Eighteen months after that, the service was discontinued. Why? A guy named Samuel Morse invented the telegraph and they were priced out of the market. With no postal union back then, the service died.
The same thing is happening today. Other than getting license plates from the DMV, I have no use for the Post Office.
Just wait until a “Do Not Mail” bill passes in one state. The USPS is doomed, as it should be.
Have you been in a post office lately? The lines are long and the service stinks.
Why should the Government subsidize junk mail?
Robert Arkow
Californians Against Telephone Solicitation
www.telemarketingwatch.org
February 25th, 2010 at 2:02 pm
Ahem. Nobody wants to talk about the $75,000,000,000.00 has overpaid to the U. S. Treasury since 1972 for “civil service retirement”. The private sector audit athorized by the Office of the Inspector General found that the USPS has over paid into the CSRS retirement fund $75 billion since 1972. The U. S. Postal Service is a viable organization if these rediculious strings could be severed once and for all and it was truely allowed to operate like a private business! Or, keep the mandate, by law. that they privide universal service at a universal price and things will be the same as they are now. By the way 5 day delivery is not the answer. There is a lot of dispute over the so called $3 billion doller savings.
February 27th, 2010 at 12:39 am
Robert Arkow,
How would you know that the lines are long and the service stinks if you have no use for the post office? You must live somewhere, so mail is delivered to you everyday. Do you refuse to accept it? If you want to comment here why don’t you stand up and explain that you want to make millions off the postal service going bottom up, instead of leaving your website address right below your name. Come on, man up.
PS - How do you get your licensce plate from your $100 laptop?
March 2nd, 2010 at 4:48 am
(1) When comparing USPS profitability to UPS and FedEx, it would be good to remember that neither are mandated to offer free delivery to every home and business in the U.S. Nor, are either under similar pricing constraints as is the USPS for its Market Dominant (mailing) products. In large part because of budget constraints many businesses face due to the economy, there is less revenue coming in, but a growing number of deliveries. This is not a sustainable situation. In case no one noticed, both UPS and FedEx profits are down this year too.
(2) As for the comment about contracting with FedEx for air lift, this is hardly an uncommon in the shipping/mailing industry. USPS contracts with FedEx, UPS, as well as numerous other transportation providers, including mailers themselves in the form ‘Workshare, Destination Discounts.” FedEx, UPS, DHL, and many others also use the USPS for what’s called ‘last mile’ delivery, which means they pick-up, sort, and transport packages to a point closer to their final destination (your home), before giving the mailpieces or packages the USPS for delivery. This is simply good business. Subcontracting is no different than what happens in other industries — printers subcontract jobs to each other all the time, so do those in the construction trades, and I’m sure there are many other industries that don’t come to mind at the moment.