|
This article forgets to mention one very important fact, per Federal law any business that competes with the US Post Office and delivers mail must either deliver their mail for FREE or charge 3 TIMES, that THREE TIMES what the US Post Office charges.
So if you want to compete with the US Post Office the government has stacked the odds against you. Despite that fact, UPS and FedEx both kick US Postal butts when it comes to delivering the mail faster, and more cost efficient. One other odd thing I have seen recently is the Post Office removed all the stamp vending machines from US Post Offices. I suspect that was not to improve postal efficiency, but to give jobs to the postal clerks, instead of letting the public buy stamps from vending machines who's labor cost is zero compared to postal clerks. Base on that I suspect the US Post Office is looking out for it's employees, rather then the taxpayers who fund it and the public whom it pretends to serve. Struggling Postal Service thinking outside the mailbox by Russ Wiles - Aug. 23, 2012 11:31 PM The Republic | azcentral.com Rain, snow and dark of night aren't the issues for the U.S. Postal Service. It's that Americans just aren't communicating through traditional mail as much as before. Low-cost telephone service, e-mail, social-networking websites, electronic birthday cards, automatic bill-paying options, digital tax-return filing and other options have siphoned away its core business. The venerable service is clearly in a bind. It recently reported a $5.2 billion quarterly loss. Yet it still must strive to meet a tough mandate: delivering the mail, though less of it, at uniform and affordable prices everywhere in the country. The challenges are immense. Beyond increasing Internet use, it must deal with fierce competition from other delivery services, an inflexible business model, high labor expenses and mounting pension and retiree-health costs. It has reported $25.3 billion in combined losses over the past five years and cut more than one-quarter of its staff since 2000. Earlier this month, it defaulted on a required payment to a retiree-health fund. Few people expect it to go out of business in the foreseeable future, but some see privatization as inevitable. The agency has backed away from a plan to close thousands of retail offices, but shorter hours likely are coming at many rural facilities, including 50 in Arizona at locales such as Greer, Jerome, Mount Lemmon, Naco and Wikieup. A general reduction in mail delivery, from six to five days a week, also has been proposed, and delivery times could get longer. "I'd have no problem with them not delivering mail on Saturday," said Peoria resident Carole Giannantonio Turley. "If that helps to save the post office, I'm all for it." At the same time, the Postal Service is pursuing more products and services to keep itself relevant. It now runs the world's third-largest computer network and is focusing on innovation and partnerships. If unshackled from restrictions imposed by Congress, some say, the Postal Service might branch out into check cashing, warehousing, notary services, Internet-access rentals, bill-paying for customers and handling services for other government entities. Fresh approaches At the Bike Emporium in Scottsdale, more than 125 people come into the store on a typical day, but only about half are thinking about cycling. The rest are there to purchase postal supplies and services -- stamps, packaging, insurance, tracking and more. "We do everything except passports and money orders," owner Glenn Kukac said. "Some people never expect to see that in a bike shop." He calls the arrangement a win-win situation: He can increase the visibility of his store while selling Postal Service products at the same prices customers would find at a regular post office. "Most of the time, there are no lines, and it's just more convenient for everyone," Kukac said. There are now roughly 71,000 approved providers nationwide, from small stores such as the Bike Emporium to giant retailers such as Walmart and Walgreens -- compared with 32,000 actual postal facilities. Arizona counts nearly 320 postal facilities, mainly retail offices, along with nearly 9,400 employees, said Peter Hass, a spokesman in Phoenix. Among other examples of innovation, the Postal Service now allows small businesses to select specific delivery routes for sending advertisements, allowing them to target marketing efforts more precisely. The Postal Service also has invested heavily in mail-scanning and other technology. Its "click-n-ship" service lets customers send certain types of parcels after buying postage online and requesting a package pickup at their doorstep. The Postal Service still faces important restrictions. Basic policies such as setting the price of stamps -- currently 45 cents for first class -- must be approved by Congress, even though the agency receives virtually no federal funding. More daunting from a financial standpoint, the Postal Service is required to prefund pension and retiree-health costs for its massive workforce of 540,000 career employees (and 638,000 overall), thus diverting money that could be used to improve the business. It missed a $5.5 billion retiree-health payment that was due Aug. 1 and has indicated it will skip a $5.6 billion payment due Sept. 30, technically putting it in default. What this means isn't clear because it hasn't happened before, although management insists it won't have a material impact on operations. Focus on costs A five-year plan to achieve financial stability and repay debt, announced by the Postal Service earlier this year, envisions new revenue streams, improved productivity and cost reductions, especially for staffing, which accounts for the bulk of ongoing expenses. Worker pay and benefits consumed 72 percent of operating expenses for the Postal Service in 2011, compared with 57 percent for United Parcel Service and 42 percent at FedEx Corp. in their most recent years. At an average hourly rate of $41.60 in 2011 for wages and benefits, Postal Service jobs pay relatively well. The Postal Service workforce has been cut from 882,000 in 2000 to 638,000. Cuts will continue, largely through attrition and early retirement incentives. Facility downsizing Some productivity enhancements can be achieved by overhauling retail services and the processing and delivery of mail to adjust for declining volumes. That means new transportation routes and fewer processing/distribution facilities. Among them: Mail flowing into a Tucson processing/distribution facility will be transferred to a similar operation at 48th and Van Buren streets in Phoenix -- the largest such facility in Arizona and one of the biggest in the nation. That means mail sent from one Tucson address to another first will be trucked to Phoenix, then sorted and sent back down Interstate 10. While reducing processing capacity is needed, some delivery times could lengthen, Hass said. Currently, 55 percent of first-class mail nationally gets delivered overnight, and nearly all the rest arrives within two or three days. The Postal Service already has consolidated more than 200 processing facilities over the past five years. Its current network of 461 processing locations could shrink by 140 more by next February. "We simply do not have the mail volumes to justify the size and capacity of our current mail-process network," Patrick Donahoe, postmaster general and USPS chief executive officer, said in a statement. Looking to Congress The Postal Service wants authority to implement measures to increase efficiency and cut costs. Roughly a dozen bills have been introduced recently in Congress, but nothing has passed that would significantly alter the grim outlook. Strategies requiring congressional action include cutting mail delivery to five days a week, which could save $3 billion annually, and obtaining a refund of payments to the retirement system, amounting to $11 billion. Management also wants Congress to ease the requirement that the Postal Service prefund retiree-health benefits. Postal Service management has complained that the agency faces hurdles that private competitors don't. For instance, it is restricted from entering substantially different lines of business that might generate revenue. Privatization possibilities Some researchers believe at least partial privatization is inevitable -- meaning a shift to shareholder ownership and Wall Street scrutiny, with new management priorities and financial incentives for executives. Without privatization, some predict eventual taxpayer support will be necessary. "What the USPS needs is greater freedom when it comes to pricing, moving into alternative lines of business, cutting costs and the like," wrote Robert Carbaugh and Thomas Tenerelli for the conservative Cato Institute. "The USPS has to bear many costs that normal businesses do not encounter -- for example, not being able to close uneconomical post offices because few members of Congress want a post office closed in their district."
Postal Service: Interesting facts Aug. 23, 2012 06:28 PM Who's cheaper? The U.S. Postal Service is routinely less expensive than FedEx on light parcels, and it beats United Parcel Service about half the time, according to a study by the agency. The Postal Service compared its Express Mail and Priority Mail services against the two competitors for sending letters and packages weighing up to 10 ounces over different shipping zones. Here's a summary of the results: 1. The Postal Service's Express Mail and Priority Mail was less expensive than comparable FedEx services in all 294 situations examined, according to the study, with price differentials ranging from about 17 percent to 77 percent. 2. The Postal Service said its Express Mail and Priority Mail was less expensive than comparable shipments by United Parcel Service in roughly half of 98 scenarios. On letters, the Postal Service was up to 23 percent cheaper. However, on certain heavier packages, UPS was up to 140 percentQ less expensive. Source: Republic Research How other nations compare Costs to mail a first-class letter in 2011 for selected countries, adjusted into dollars and cents:
*U.S. first-class rates have since risen to 45 cents. Source: U.S. Postal Service The cost to deliver a letter For every 45 cents the Postal Service receives for a first-class letter, it incurs the following expenses, resulting in a loss of 14.8 cents per letter.
Note: This is an illustration of the Postal Service's latest quarterly financial results using a standard 45-cent stamp to represent the agency's total revenue. Source: Republic research
Postal Service has $5.2B loss, will miss payment by Hope Yen - Aug. 9, 2012 08:51 AM Associated Press WASHINGTON -- The nearly bankrupt U.S. Postal Service on Thursday reported a quarterly loss of $5.2 billion and warned it will miss another payment due to the Treasury, just one week after its first-ever default on a payment for future retiree health benefits. From April to June, losses were $2.1 billion more than during the same period last year. The mail agency said it is being hurt significantly by mounting costs for future retiree health benefits. Those expenses made up $3.1 billion of the post office's quarterly loss. Declining first-class mail volume also contributed to losses. "We have simply reached the point that we must conserve cash," Thurgood Marshall Jr., chairman of the Postal Service's board of governors, said in explaining the payment defaults. He cautioned that the mail agency may have to delay other payments if necessary but that day-to-day mail service will not be impacted in any way. The Postal Service for months has been urging Congress to pass legislation that would allow it to eliminate Saturday mail delivery and reduce the annual health payment of more than $5 billion. The post office defaulted on that payment last week after the House failed to take action before heading home for a five-week break. The mail agency says it will miss the second $5.6 billion payment due on Sept. 30, also for future retiree benefits, as cash runs close to zero. "We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability," said Postmaster General Patrick Donahoe. "We will continue to take actions under our control to improve operational efficiency and generate revenue by offering new products and services to meet our customers' changing needs." Overall, the post office had operating revenue of $15.6 billion from April through June, the third quarter of its 2012 fiscal year. That was down a fraction from the same period last year. But quarterly expenses this year climbed to $20.8 billion, up 10 percent, largely driven by the health prepayments. The Postal Service is the only government agency required to make such payments. The Postal Service also has been hurt by declining mail volume as people and businesses continue switching to the Internet in place of letters and paper bills. The number of items mailed during the last quarter was 38.5 billion pieces, a 4 percent decrease, much of it in first-class mail. On the positive side, the mail agency reported that it continued to lower costs by reducing work hours and boosting employee productivity. The Postal Service's fast-growing shipping services, which include express and priority mail, had a 9 percent increase in operating revenue to $3.3 billion. That strong growth in shipping services, which the mail agency is promoting as a cheaper alternative to FedEx and UPS, helped offset roughly three-fourths of the continuing declines in first-class mail, said Stephen Masse, the Postal Service's acting chief financial officer. The numbers bring the Postal Service's year-to-date net loss to $11.6 billion, compared to $5.7 billion for the same period last year. Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, a group representing the private-sector mailing industry, cautioned that the worst of postal losses may be yet to come. He noted that the Postal Service's third-quarter numbers may reflect an unusually higher volume of mail that typically occurs in an election year. "There are more than 8 million private sector workers whose jobs depend on the mail, and these jobs may be in jeopardy if Congress fails to reform the Postal Service," he said. "As bad as things are getting for the Postal Service, it could be worse next year." The agency has forecast a record $14.1 billion loss by the end of this year. Without legislative changes, it said, annual losses will exceed $21 billion by 2016. The Senate passed a postal bill in April that would have provided financial relief in part by reducing the annual health payments and providing an $11 billion cash infusion, basically a refund of overpayments the Postal Service made to a federal pension fund. The House, however, remains stalled over a separate bill that would allow for aggressive cuts, including an end to Saturday delivery. Rural lawmakers, in particular, worry about the impact of closures in their communities. The Postal Service originally sought to close low-revenue post offices in rural areas to save money but after strong public opposition it is now moving forward with a new plan to keep 13,000 open with shorter operating hours. The Postal Service, an independent agency of government, does not receive tax money for its day-to-day operations but is subject to congressional control. |