March 29, 2024

U.S. Postal Service Reports $15.9 Billion Loss

The widely expected loss, more than triple the service’s loss last year, included accounting expenses of $11.1 billion related to two payments that the agency was supposed to make into its future retiree health benefits fund. But because of revenue losses, the post office was for the first time forced to default on these payments, which were due in August and October. Nearly $5 billion in other losses were because of a decline in revenue from mailing operations. The agency also reached its $15 billion borrowing limit from the Treasury.

Despite its financial troubles, officials said that the Postal Service would keep operating as usual and that employees and suppliers would be paid on time. The agency had warned that it could face a $100 million cash crunch in October because of a decline in revenue. But the agency reported more than $500 million in revenue from campaign mailings by candidates, political parties and other interest groups before the election. The agency said the revenue from political mail and the holiday season should help its cash situation until Congress acts on legislation to overhaul the post office.

The agency’s financial reports show that mail volume continues to decline as Americans increasingly turn to electronic forms of communication. Total mail volume was 159.9 billion pieces, down 5 percent from 168.3 billion pieces a last year. Operating revenue was $65.2 billion, down from $65.7 billion over the same period.

For nearly a year, the agency has been urging Congress to pass legislation that would allow it to save costs, including cutting back the number of days it delivers mail to five days a week, reducing annual payments required for its future retiree health fund and entering into new lines of business, like delivering beer and wine by mail.

Patrick R. Donahoe, the postmaster general, says Congress needs to act fast. “It’s critical that Congress do its part and pass comprehensive legislation before they adjourn this year to move the Postal Service further down the path toward financial health,” Mr. Donahoe said.

In April, the Senate passed a bill that provided incentives to retire about 100,000 postal workers, or 18 percent of its employees, and allowed the Postal Service to recoup more than $11 billion it overpaid into an employee pension fund. The Senate refused to stop Saturday deliveries. The House has taken no action, and it is unclear if the legislation will be taken up as lawmakers work to avert a series of across-the-board tax increases and spending cuts scheduled to take place Jan. 1.

The Coalition for a 21st Century Postal Service, a business group tied to the mailing industry, urged Congress to enact comprehensive postal legislation during its lame-duck session.

“The Postal Service is facing a fiscal cliff of its own, and any unanticipated drop in mail volumes could send the agency over the edge,” said Art Sackler, a coordinator of the coalition. “If Congress fails to act, there could be postal slowdowns or shutdowns that would have catastrophic consequences for the eight million private-sector workers whose jobs depend on the mail.”

Article source: http://www.nytimes.com/2012/11/16/us/politics/postal-service-reports-a-nearly-16-billion-loss.html?partner=rss&emc=rss

Cuts by Postal Service Cuts Will Slow First-Class Mail

Delivery delays will result from the postal service’s decision to shut about half of its 487 mail processing centers across the nation. 

This would cause the postal service to reduce delivery standards for first-class mail for the first time in 40 years, substantially increasing the distance that mail travels between post offices and processing centers.

Current standards call for delivering first-class mail in one to three days within the continental United States. Under the planned cutbacks, those delivery times would increase to two or three days, potentially creating problems for companies like Netflix that rely heavily on next-day delivery.

The agency announced in September that it would begin studying plans to close 252 out of 487 mail processing centers, and on Monday it said it would “move forward” with that plan, with closings to begin as early as March. Heavy pressure from Congress or the public could still cause the postal service to scale back the plan, at least somewhat.

Patrick Donahoe, the postmaster general, has repeatedly said that by 2015 he hopes to cut $20 billion from the agency’s annual costs, which are now about $75 billion. He has called for closing up to 3,700 of the nation’s 32,000 post offices, while reducing deliveries to five days a week from six, and cutting the agency’s work force of 653,000 employees by more than 100,000.

“We’re in a deep financial crisis today because we have a business model that’s tied to the past,” he said at a news conference last month. “We are expected to operate like a business, but don’t have the flexibility to do so. Our business model is fundamentally inflexible. It prevents the postal service from solving its problems.”

Mr. Donahoe has urged Congress to act with more urgency to allow the postal service to cut costs. In recent months, he has complained repeatedly that his agency needs permission from Congress to take the actions he says it needs in an era when mail volume has plunged largely because of the explosion of e-mail and electronic bill-paying. Mail volume has dropped more than 20 percent — by more than 40 billion pieces — over the last five years.

According to The Associated Press, about 42 percent of first-class mail is currently delivered the following day, while 27 percent is delivered in two days. Thirty-one percent arrives in three days and less than 1 percent is delivered in four to five days.

According to postal officials, after processing centers are closed in the spring, slightly more than half of all first-class mail is expected to be delivered in two days, with most of the rest arriving in three days.

The postal service previously announced a 1-cent increase in first-class postage, to 45 cents, starting Jan. 22.

The postal service said there would still be opportunities for companies that properly prepare and enter mail at the destination processing center so their mail could be delivered the following delivery day.

David Williams, the vice president for network operations, said, “The proposed changes to service standards will allow for significant consolidation of the postal network in terms of facilities, processing equipment, vehicles and employee work force, and will generate projected net annual savings of approximately $2.1 billion.”

Article source: http://feeds.nytimes.com/click.phdo?i=2b05b39eeecafd1a428a66913541d928