Big losses mandate change

Big losses mandate change

The new postal service won't be like the old postal service.

The continuing financial problems that plague the U.S. Postal Service are laying the groundwork for dramatic changes in the frequency and manner of mail delivery.

It was just a few months ago that the postal service announced that it would like to do away with Saturday deliveries. Congressional opposition blocked that proposal, at least for the time being, but the handwriting is on the wall.

Recent financial figures illustrate the problem. The postal service, an independent agency, lost $740 million for a three-month period that ended on June 30. Here's what's shocking — that represented a reduction in previous losses.

The postal service lost $3.9 billion during the first six months of 2013. Last year, the postal service lost $16 billion.

It's that kind of mind-boggling financial failure that has postal managers contemplating unheard-of service changes in the coming years, including terminating door-to-door delivery and replacing it with cluster box and curbside delivery.

The postal service is also seeking new revenue-generating opportunities, the most prominent of which is the ability to ship beer, wine and spirits. That will require congressional permission but, if adopted, postal officials estimate they could generate an additional $50 million a year by competing with private delivery businesses.

Postal officials, however, said that they cannot avoid disaster without new legislative authority from Congress. Traditionally, Congress has caused more problems for the post office than anything else, mostly blocking service cuts that drive up costs. Members of the U.S. House and Senate have so far not been able to embrace a single plan. But they eventually will because they have no choice.

What people will see over the coming decade is a titanic shift in how the postal service operates, the principal result of which is that it will be doing less than it does now. Services people take for granted will disappear.

The postal service quandary is represented by the economic axiom that if something can't last forever, it won't. The postal service cannot keep generating these devastating financial losses; getting costs under control is an unavoidable necessity, and it won't be pretty.

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Political Observer wrote on August 15, 2013 at 5:08 pm

As it stands, I'd say a somewhat generous grade for this assignment would be somewhere between a D and a D-.  If you'd like to have a chance to improve your grade and avoid flunking out of Introductory Editorial Writing 101 yet one more time, I'd suggest a complete re-write where you try doing a little research before you start pounding out the words on the keyboard. 

One thing you might want to try is typing a search inquiry like [post office pre pay pensions] in your favorite search engine; then ask yourself some basic questions like, "Does requiring a business entity to pre-pay employees' retiree health benefits for 75 years in the future - meaning that they're paying for health benefits for postal carriers who haven’t even been born yet - have any kind of negative impact on a business' bottom line?

Here's a link to help you get started:

http://talkingpointsmemo.com/archives/2011/08/more_on_the_postal_service...

It's a couple of years old, but still quite relevant to today's discussion...

Political Observer wrote on August 19, 2013 at 1:08 pm

For those who detest doing websearches like the one suggested above in my earlier comment, here's an excerpt from a short piece posted earlier this year at the Time.com website that discusses the problem the Post Office has been having with funding the health benefits for future retirees 75 years in advance:
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http://business.time.com/2013/02/07/how-healthcare-expenses-cost-us-satu...


Since 2006, the Post Office has been legally required to pre-fund health benefits for future retirees at a cost of around $5.5 billion a year. For the first time last year, it defaulted on its annual payment.


When Congress imposed those mandates in 2006, the Post Office was doing just fine. Digital communication had yet to take such a huge bite out of the amount of mail the USPS processed and delivered. First-class mail volume was about 97 billion pieces in 2006. So there wasn’t much of a backlash when Congress decided that the Post Office was healthy enough to lock in health benefits for future retirees — for the next 75 years, mind you, something no other public or private agency does.
Two years later, the U.S. was hit by the Great Recession at around the same time  that mobile communication and things like online bill payments were growing at explosive rates. The Post Office began reporting massive deficits from which it has yet to recover. Last year it delivered only 68 billion pieces of mail.
So far the Post Office has placed about $44 billion in that pre-retiree account. Without the mandate, the Post Office’s financials — while still not completely healthy — would be much more stable.


Read more: http://business.time.com/2013/02/07/how-healthcare-expenses-cost-us-satu...