Post Office's $5.2billion loss in 3rd quarter

[summer]

www.reuters.com/article/2012/08/09/us-usa-postal-loss-idUSBRE8780TV20120809

Reuters

WASHINGTON -- The U.S. Postal Service's net loss widened to $5.2 billion during the April through June period, and the cash-strapped agency warned on Thursday that without help from the U.S. Congress it will be unable to borrow money this fall.

The Postal Service, which relies on the sale of stamps and other products rather than taxpayer funding, has been struggling for years as Americans increasingly communicate online and as payments for future retiree health benefits and other obligations drain its cash.

A week after its first-ever default on a legally required payment to the federal government, officials called on Congress to pass postal legislation that would overhaul the mail agency's business model and offer some relief from its dire financial situation.

Lawmakers, who have said they are committed to helping the Postal Service become profitable, left last week for a month-long recess without reaching an agreement on postal legislation.

"Congress needs to act responsibly and get on with things so that we can get these things in our rearview mirror," Postmaster General Patrick Donahoe said on Thursday.

While postal officials insist it is unlikely Congress would allow the Postal Service's financial straits to get so dismal as to impede mail delivery, the agency has said it needs a significant restructuring to get back on sound footing.

The mail agency defaulted last week on a legally required $5.5 billion payment for future retiree health benefits, and its inspector general said the Postal Service could face a $100 million cash shortfall in mid-October.

Much of the net loss of $5.2 billion in the third quarter, compared to $3.1 billion for the same period in 2011, came from funds the agency must set aside for the retiree benefits payment. Even though the Postal Service defaulted and expects to skip a second payment due next month, it still must account for the payments in its financial statements.

Even without the payments, a postal official told the agency's Board of Governors on Thursday that the Postal Service lost about $1 billion on normal operations as Americans' ongoing shift to email strangled mail volume.

The USPS has made a number of cost-cutting moves, slashing operating hours at small post offices, offering buyouts to thousands of workers and launching a plan to consolidate operations at 140 processing sites by February.

Still, the service projects a net loss of about $15 billion for the fiscal year, which goes through September, said Stephen Masse, acting chief financial officer for the agency.

Postal officials said Congress needs to step in. They want authority to end Saturday mail, pull employees out of federal health plans and run their own instead, stop making the payments for future retiree benefits and make other changes.

The Senate passed a bill in April that would let the agency end Saturday mail and tap into a surplus in a federal retirement fund to offer retirement incentives to workers.

Leaders in the House of Representatives have said that bill does not go far enough, but they left last week for a recess until after the September 3 Labor Day holiday without bringing their version of the postal reform bill up for a vote.

"I can only hope that as members of Congress are back in their districts meeting with their constituents over the next month, they will hear these concerns about the future of the Postal Service and be persuaded that they cannot continue to postpone passing comprehensive postal reform legislation," said Senator Tom Carper, one of four authors of the Senate bill.
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Shipping services and package delivery were a bright spot, growing 9 percent in revenue compared to the same quarter a year earlier. Email and online bill payments have hurt letter mail volumes, but the USPS's shipping business has benefited from online shopping and sites like eBay.com.

But mail volume fell 3.6 percent to 38.5 billion pieces, the agency said. Operating revenue during the quarter was $15.6 billion, a decrease of less than 1 percent from a year earlier.

Postal officials said the agency will face low cash levels in October, when a $1.4 billion payment for workers compensation comes due.

Masse said officials believe extra revenue from election-related mail could get the agency through the tight period. The cash crisis should improve during the holiday mailing season, typically the best time of year for the Postal Service.

He also said the agency would prioritize paying suppliers and employees over making obligations to the federal government, but he did not say what payments the USPS might skip or delay.

Last summer, the Postal Service temporarily halted payments into a retirement system that has surplus funds. The agency's inspector general has said the USPS could do the same this year.

[pedanticwench]

Could any of this have to do with how cheap it is to mail items first class? $.45 for a letter or small envelope to get from Texas to Vermont is crazy cheap.

I mailed some books via Media Mail last week and it only cost me $2 and change. And they're going to the Virgin Islands!

God, I hope the USPS doesn't fail. I have way to many stamps to use.

[mominatrix]

Can somebody explain to me why the postal service has to be profitable?

Do we expect fire departments to turn a profit? Or the FBI? What about the national parks?



Sure, a lot of what the post office does (overnight, boxes) is comparable to businesses, but it's mailing small items at a reasonable price to EVERY address in the US that makes them different from a business.



...via mobile.

[copzgirl1171]

I hope they flop. I am still bitter over a bunch of babycopz grad invites getting returned for more postage because they were an irregular size that didn't fit into their sorters..even though they did not weigh more than a standard envelope and letter.

[IIOY]

Aug 10, 2012 10:16:19 GMT -5 mominatrix said:

Can somebody explain to me why the postal service has to be profitable?

Do we expect fire departments to turn a profit? Or the FBI? What about the national parks?



Sure, a lot of what the post office does (overnight, boxes) is comparable to businesses, but it's mailing small items at a reasonable price to EVERY address in the US that makes them different from a business.



...via mobile.

I don't think anyone is arguing that it needs to be making money hand over fist so much as be able to simply cover its obligations, which apparently it cannot do at this time.

[wawa]

Aug 10, 2012 10:17:58 GMT -5 @copzgirl1171 said:

I hope they flop. I am still bitter over a bunch of babycopz grad invites getting returned for more postage because they were an irregular size that didn't fit into their sorters..even though they did not weigh more than a standard envelope and letter.

^o) you know the size and shape guidelines are pretty clearly outlined on their website right? it's not like they did it maliciously.

anyway...I have a soft spot for the postal service. Not wind, nor rain, nor gloom of night...

It's old fashioned and sorta romantic in a way.

And my grampsy was the postmaster of their town. So there's that.

It'd be a bummer if they went away or were drastically cut back, but mushy stuff aside I think you can make the argument that they're outdated. 99% of the mail I get these days is junk anyway. And the occasional wedding invite or bill or extremely rare real letter could be sent via private carrier. It'd just cost more.

[Deleted]

Aug 10, 2012 10:24:00 GMT -5 wawa said:

anyway...I have a soft spot for the postal service. Not wind, nor rain, nor gloom of night...

Me too.

USPS 4LYFE.

[copzgirl1171]

Aug 10, 2012 10:24:00 GMT -5 wawa said:

Aug 10, 2012 10:17:58 GMT -5 @copzgirl1171 said:

I hope they flop. I am still bitter over a bunch of babycopz grad invites getting returned for more postage because they were an irregular size that didn't fit into their sorters..even though they did not weigh more than a standard envelope and letter.

you know the size and shape guidelines are pretty clearly outlined on their website right? it's not like they did it maliciously.

anyway...I have a soft spot for the postal service. Not wind, nor rain, nor gloom of night...

It's old fashioned and sorta romantic in a way.

And my grampsy was the postmaster of their town. So there's that.

It'd be a bummer if they went away or were drastically cut back, but mushy stuff aside I think you can make the argument that they're outdated. 99% of the mail I get these days is junk anyway. And the occasional wedding invite or bill or extremely rare real letter could be sent via private carrier. It'd just cost more.

I really don't hope they flop wawa. It was frustrating to get some back and not get some back. Not every single one got returned just some.

I still need to get my magazines

[wawa]

Aug 10, 2012 10:27:36 GMT -5 @copzgirl1171 said:

Aug 10, 2012 10:24:00 GMT -5 wawa said:

you know the size and shape guidelines are pretty clearly outlined on their website right? it's not like they did it maliciously.

anyway...I have a soft spot for the postal service. Not wind, nor rain, nor gloom of night...

It's old fashioned and sorta romantic in a way.

And my grampsy was the postmaster of their town. So there's that.

It'd be a bummer if they went away or were drastically cut back, but mushy stuff aside I think you can make the argument that they're outdated. 99% of the mail I get these days is junk anyway. And the occasional wedding invite or bill or extremely rare real letter could be sent via private carrier. It'd just cost more.

I really don't hope they flop wawa. It was frustrating to get some back and not get some back. Not every single one got returned just some.

I still need to get my magazines

whatevs yo. You just hate my grampsy and you know it.

[eclaires]

Our post office sells greeting cards, wrapping paper, and all kinds of crap.

Anyway, from the article, it seems like their biggest issue is their retiree benefits? It's not that they are undercharging for services so much as they owe more money than they make on things like that and can't cover the other costs. It seems like reform is in order.

[pescalita]

We use them to ship our web store orders. The service beats the pants off UPS and FedEx in both price and speed. The closest they got on price was the services where UPS/FedEx takes it most the way and then hands off to USPS for local delivery. The transit time for that is ridiculously long, and it was a nightmare in lost packages.

I think we hit a sweet spot in the size/weight of our product, but I really don't think it's the service that's the problem. They could probably charge more.

[copzgirl1171]

Depends wawa, is the old geezer sucking off the Amurican tit

[hawkeye]

Isn't one of their main problems the crazy ridiculous pensions they are funding?

[Deleted]

Aug 10, 2012 10:34:14 GMT -5 eclaires said:

Our post office sells greeting cards, wrapping paper, and all kinds of crap.

Anyway, from the article, it seems like their biggest issue is their retiree benefits? It's not that they are undercharging for services so much as they owe more money than they make on things like that and can't cover the other costs. It seems like reform is in order.

And this problem is hardly unique to USPS.

I have a soft spot for USPS because a) the power to establish post offices is explicitly mentioned in the Constitution, and b) despite its problems, its a surprisingly efficient service.

Also, despite phones and the Internet, I still view the USPS as a collective good. We were just discussing the other week about how a spike in gas prices would disproportionately affect people in rural areas. A wholesale privatization of the USPS would undoubtedly be felt the most by rural areas.

[pedanticwench]

I also have a soft spot for the USPS and I think they do a darn good job overall.

I would be very sad if the USPS became privatized.

[wawa]

Aug 10, 2012 10:34:47 GMT -5 @copzgirl1171 said:

Depends wawa, is the old geezer sucking off the Amurican tit

well...he's does have one of those pensions that are sucking them dry.

And besides that I'm pretty sure they are SS and medicare all the way, so yes, he IS the problem. Still, he's pretty badass.

[PinkSquirrel]

Aug 10, 2012 10:41:01 GMT -5 hawkeye said:

Isn't one of their main problems the crazy ridiculous pensions they are funding?

I think the bigger problem is that they now have to prefund the pensions and not pay as they go.

[wawa]

Aug 10, 2012 10:49:51 GMT -5 PinkSquirrel said:

Aug 10, 2012 10:41:01 GMT -5 hawkeye said:

Isn't one of their main problems the crazy ridiculous pensions they are funding?

I think the bigger problem is that they now have to prefund the pensions and not pay as they go.

Ah, so it's current employees pensions killing them? That's interesting.

Ok, so I'm back to copz not being allowed to hate my gramps.

[eclaires]

Aug 10, 2012 10:42:17 GMT -5 @angryharpy said:

Aug 10, 2012 10:34:14 GMT -5 eclaires said:

Our post office sells greeting cards, wrapping paper, and all kinds of crap.

Anyway, from the article, it seems like their biggest issue is their retiree benefits? It's not that they are undercharging for services so much as they owe more money than they make on things like that and can't cover the other costs. It seems like reform is in order.

And this problem is hardly unique to USPS.

I have a soft spot for USPS because a) the power to establish post offices is explicitly mentioned in the Constitution, and b) despite its problems, its a surprisingly efficient service.

Also, despite phones and the Internet, I still view the USPS as a collective good. We were just discussing the other week about how a spike in gas prices would disproportionately affect people in rural areas. A wholesale privatization of the USPS would undoubtedly be felt the most by rural areas.

Oh I don't want privatization of the USPS, so I agree with you there. I think it's a good service, and I've had very little issue with USPS, ever. The cost and services are pretty good, IMO (and I use them for shipping via paypal for my ebay stuff at a fairly high volume). Everything I've done is easy and at a competitive price. Their customer service is really good in my experience. Scheduling a pickup is super simple and a really great perk.

I just think they may need to do something about their pensions and maybe Saturday mail (if that helps them cut their costs)? I'm not sure what else they can do to fix things, but I think it makes more sense to look at reforming/revising their pension obligations than privatizing and/or doing away with the USPS.

[copzgirl1171]

Don't hate wawa's gramps

[Deleted]

Aug 10, 2012 11:00:58 GMT -5 eclaires said:

I just think they may need to do something about their pensions and maybe Saturday mail (if that helps them cut their costs)? I'm not sure what else they can do to fix things, but I think it makes more sense to look at reforming/revising their pension obligations than privatizing and/or doing away with the USPS.

Agreed. Privatizing the USPS is a frequent rallying cry I hear from conservatives. I can get behind making it as efficient as possible, but I can't get behind eliminating it. I think it really does provide a vital service for the country.

[SusanBAnthony]

One thing that I read that makes sense to me is cutting the hours of more rural offices. So if the PO in bum fuck nowhere gets an average of 4 customers a day, they are only open 10-2 instead of 8 or more hours.

It is an interesting problem. I am not in favor of privatization or anything, but this cannot go on. I am fine with cuts in delivery days, cuts in physical PO locations, cuts in PO hours, etc.

[vanillacourage]

I have no need to receive mail on Saturdays, I don't know why don't immediately make that cut.

[Velvetshady]

Aug 10, 2012 12:17:41 GMT -5 vanillacourage said:

I have no need to receive mail on Saturdays, I don't know why don't immediately make that cut.

I can agree with not receiving mail on Saturdays, but not on closing Post Offices on Saturdays. We live in a rural area, and when I'm not working home, that means we both drive past our PO before it opens at 8am and long after it closes at 5pm. We aren't the only ones--the PO is swamped from 8-noon on Saturdays and one of the workers told DH they do ~70 of their non-business business on Saturdays.

We are rural enough that the only reason we still have a local post office is a local business that mails a ton of stuff every day (they own the rights to a majority of movie soundtracks).

And my Great-Grandmother was a Postmistress. So stop hating on her (And although she did live to 99, she's been dead a few decades, so she's not the problem.)

[laurenpetro]

I heard somewhere (probably NPR) that the money bleeders aren't the small rural offices but the larger sorting facilities that are eventually going to have to consolidate.

[ChillyMcFreeze]

Aug 10, 2012 12:03:52 GMT -5 SusanBAnthony said:

One thing that I read that makes sense to me is cutting the hours of more rural offices. So if the PO in bum fuck nowhere gets an average of 4 customers a day, they are only open 10-2 instead of 8 or more hours.

It is an interesting problem. I am not in favor of privatization or anything, but this cannot go on. I am fine with cuts in delivery days, cuts in physical PO locations, cuts in PO hours, etc.

www.npr.org/2012/07/01/156082698/a-new-reality-for-rural-post-offices

This post office in a small NH town is open 30 minutes a day. Sounds crazy to me, but in a town of 500 people, I guess it's not unreasonable!

[Deleted]

I think the post office has it backwards. I think you should get a mailbox at the building for free and pay to have it delivered.

And yes, yes, I know, people can't afford such and such. But look, poor people pay for utilities all the time. Make home delivery a utility.

Or if you don't want to go that far, where you have to pick up at a post office, then why not convert to neighborhood mail boxes with the option to pay for home delivery?

[wawa]

I have a hard time believing that the bulk of their operating budget actually comes from the nice lady standing at the counter selling stamps and weighing packages though.

Isn't it more the actual sorting and delivering of all this stuff where most of the man hours get spent? (not to mention equipment, gas, etc) It just seems like cutting counter-service hours is really a drop in the bucket.

Not that I've ever looked at the actual operating budget of the USPS.

[kadams767]

I wonder if they could switch to a Saturday model similar to FedEx, without getting rid of Saturday delivery altogether? Have an extra charge for Saturday delivery for people who want to continue with receiving delivery on Saturdays, and an extra charge for a package to be delivered on a Saturday?

[Velvetshady]

Aug 10, 2012 13:19:16 GMT -5 @habbsies said:

Or if you don't want to go that far, where you have to pick up at a post office, then why not convert to neighborhood mail boxes with the option to pay for home delivery?

I know we have neighborhood boxes on all newer developments around us (newer being relative--our house is ~9 years old). I think converting older neighborhoods to those isn't a terrible idea--if nothing else, it would reduce their gas costs.