USPS

USPS: The Losses Keep Piling Up

Phillip Nones Uncategorized , , , , , , , , , , , , , , , ,

The latest financial results for the U.S. Postal Service are in, and they’re a continuation of the same old story line: Tons of red ink and fingers pointing in every direction.

The USPS posted a net loss of $3.9 billion for FY 2009, “only” $1.1 billion worse than the previous year. And that’s even after receiving a $4 billion deferment on paying an annual $5.4 million obligation to pre-fund healthcare premiums for its retirees.

Not surprisingly, total postal revenues were down about 10% to ~$68 billion, not only because of the economic downturn but also because of the continuing shift to digital communications. Total physical mail volume declined ~13% to around 177 billion pieces.

Given the sorry financial stats, one would assume that the USPS would be moving forward in all haste with its plans to shutter as many as 10% of its post offices and branches around the country.

But if you thought that … you would be wrong. What started out as a potential closure listing of ~3,200 stations (the impressively named Station & Branch Optimization Initiative) quickly became ~700 stations and branches that were actually slated to close. Then that figure was trimmed to just over 400. And now we have word that the closure figure is down to ~370.

Given more time, the number of closures may well slip even further … and at some point the whole exercise becomes completely meaningless as cost-cutting endeavor.

And then there are the persistent rumors that mail delivery will be cut back to five days from six. But that never seems to be anything more than just an idle threat.

Welcome to the wonderful world of government agencies: Stultifying bureaucratic procedures that are near-Byzantine in their complexity, coupled with reacting to every conceivable interest group while being too timid to make any hard choices at all when it comes to managing their operations like any business in private industry must do.

Anyone for government-managed healthcare?

USPS: Why don’t we just throw another couple billion around?

Phillip Nones Uncategorized , , , , , , , , , , , , , , , ,

Last week, the United States Postal Service reported its latest quarterly financials — a $2.4 billion loss. Compare that result against the same quarter last year (pre-stock market dive), when the USPS lost only a mere $1.1 billion …

But what the heck? Why doesn’t the government throw a few more billions of dollars around? That’s probably in the cards, because Postmaster General Jack Potter has let it be known that the USPS may be on track for losing as much as $7 billion for the year … and that’s even if the USPS follows through on its plans to shutter ~3,200 post office locations (nearly 10% of the total).

Of course, one of the reasons for the sorry financials is a decline of USPS operating revenue on the order of around 9%. The most recent postal rate hike couldn’t make up for the ~14% decrease in mail volume, which dipped not just because of the recession but also because of changing communications practices, online bill-paying and the never-ending growth of e-mail.

Still, those volume declines are not as steep or as challenging as many private-industry companies have faced in their industries. Could it be that the USPS, as a government entity with all of the bureaucracy and HR/personnel strictures that entails, simply cannot be as nimble and flexible as firms in private industry? And what does this portend for us in the realm of government-managed healthcare?

Maybe the words of singer-songwriter Bobby McFerrin are applicable here: “Don’t worry. Be happy.”

Besides, what’s the alternative — clinical depression?

What?! A Reduction in Postal Rates?

Phillip Nones Uncategorized , , , , , , , , , , , , ,

The first class postage rate is going up again this month. But not so fast! The USPS is actually having a sale on postage as well.
The new first class postage rate is going up again this month. But not so fast! The USPS is actually having a sale on postage as well.
Death … taxes … rising U.S. postal rates. It seems all three of these things are just a given. And the USPS is getting ready to up the price mailing a first-class envelope another 2 cents, effective next week.

But hold on! Because it’s suffering from a significant decline in mail volume approaching 15%, the USPS is concurrently rolling out a special program heretofore never seen from this most politically tin-eared of government agencies. The impressively named Saturation Mail Incentive Program gives large standard mail direct marketers who increase their mailing volumes the opportunity to earn per-piece credits — discounts essentially — on their mailing activity.

The discounts themselves are rather small — ranging from 2.2 cents per nonprofit letter mailer to 4.0 cents per flat piece (catalog).

… And the “fine print” conditions as to who actually qualifies for the discounts are almost byzantine in their description.

… And the savings are for a limited time only (~1 year) beginning this month.

… And program participants must formally apply to the USPS for approval.

… And they must do so by June 11 or lose their opportunity to participate at all.

… And, and, and … Well, you get the idea.

But the fact that the postal service is actually throwing a “sale” on rates is big news in and of itself. When has this ever happened before?

Quoting the eloquent words of USPS spokesperson Michael Woods, “The Postal Service is always looking for ways to use our pricing flexibility to improve business, and the current economic climate makes that more important than ever.”

Translation: “We’ve lost a pile of business in the economic downturn, and maybe if we lower our prices, we’ll get some of it back.”

Good luck.

We’ll check back after a few months to see how things are going. Judging from the most recent financial results published this week — a quarterly loss of nearly $2 billion — we may not see much improvement. After all, the USPS has managed to make money in only one quarter out of the past eleven!

UPDATE (5/18/09) — The USPS has now finalized the program, which will now launch July 1. Details are here.