Thursday, November 15, 2012

USPS Too big to Fail?

Every quarterly and annual report for the past several years has repeatedly shown that the US Postal Service is failing rapidly. They simply cannot meet their obligations with continued falling revenues. Raising postal rates doesn't help, that just causes a proportionate number of more people to stop using the Post Office.

The bottom line, reduced rate junk mail has not and will not sustain the Post Office, neither will the continued expenses the Postal Service is paying in wages and benefits according to their union contracts. If there ever was a grandiose example of the failure of unions in America and what they truly cost the consumer, then the USPS unions should be that poster child.

The simple reality is that with continued diminished use of the USPS and the ever increasing employee wage contracts and benefits costs, the colossal collapse of USPS is only a matter of when not if. And that when is here.
U.S. Postal Service Faces Default Without Action
The U.S. Postal Service said its net loss last year widened to $15.9 billion, more than the $15 billion it had projected, as mail volume continued to drop, falling 5 percent.
  U.S. Postal Service on ‘Tightrope’ Loses $15.9 Billion in 2012
Mail sits at the U.S. Postal Service processing and distribution center in Merrifield, Virginia. Photographer: Andrew Harrer/Bloomberg
Without action by Congress, the service will run out of cash on Oct. 15, 2013, after it makes a required workers compensation payment to the U.S. Labor Department and before revenue typically jumps with holiday-season mailing, Chief Financial Officer Joe Corbett said today.
The service, whose fiscal year ends Sept. 30, lost $5.1 billion a year earlier. It announced the 2012 net loss at a meeting at its Washington headquarters.
“We are walking a financial tightrope,” Postmaster General Patrick Donahoe said at the meeting. “Will we ever stop delivering the mail? It will never happen. We are simply too important to the economy and the flow of commerce.”


Texan in Wisconsin said...

While I agree that USPS is circling the drain, I have a little different take on why. We used to sit at the kitchen table, twice per month, and pay the bills that were due. We'd write checks, lick envelopes, and put a stamp on about 25 bills twice per month. Figure 50 letters at 40c each, that's $20/month. You know how many we mail now? Zero.

So if only 10% of the 100 million households do this...that's a lotta bucks lost. Plus, law firms, real estate companies, etc, don't mail docs anymore -- they are all sent by email.

I like using USPS for some things. I still hand-write thank you notes and put them in the mail.

But our kids don't even check their mailboxes more than once a week.

Electrons are killing USPS.

So cut back mail service to 3 days per week, and lay off a boat-load of folks. I'm not being insensitive, but any private-sector manager can see the answer. It's the politicians and the unions who are standing in the way of the fix. And they'll stand right on the edge as the hole swallows them up.

Damned shame.

Prime said...

Tex, you are absolutely right, but in the final analysis, it is the lack of revenue and the union contracts that are killing the USPS.

You are correct, they will have to cut service, lay off half of their labor force and then hopefully start charging these junk mailers to carry their junk mail.

Or else it all goes down the tubes.