Postal Service warns of default as losses mount

[Big Don]

Postal Service warns of default as losses mount

By Ben Rooney, staff reporter February 9, 2011: 3:47 PM ET


NEW YORK (CNNMoney)EXCERPT: -- The U.S. Postal Service warned Wednesday that it may default on some of its financial obligations later this year after reporting yet another quarterly loss.
The USPS, a self-supporting government agency that receives no tax dollars, said it suffered a loss of $329 million in the first quarter of federal fiscal year 2011. That compared with a loss of $297 million a year earlier.
The agency has been suffering from an ongoing decline in mail volume, which has undercut revenues, while retiree health care costs have been straining its reserves.
Excluding costs related to retiree benefits and adjustments to workers' compensation liability, the Postal Service said it had net income was $226 million in the first quarter, which ended Dec. 31.
Despite ongoing cost-cutting efforts, the USPS said it expects to have a cash shortfall this year and to hit its federally mandated borrowing limit by September, when the government's fiscal year ends.
<<<SNIP>>>
The USPS has also cut back on hours to save money. The agency expects to eliminate 40 million work hours this fiscal year as part of a plan to save $2 billion.
However, the service is currently negotiating new contracts with the American Postal Workers Union and the National Rural Letter Carriers Association, which will probably object to cutting hours.

END EXCERPT
Gee, maybe being overrun with unions isn't such a great thing...

 

[Bob Hubbard]

The USPS is not allowed to offer alot of the things that UPS and Fex Ex do to make up the differences. They also must run all rate changes past Congress, something their competitors don't. They are seriously handcuffed.

But you wont get a better deal on sending a letter. 44c vs a couple bucks at ups/fed ex.

 

[CanuckMA]

And USPS cgharges the same to go across the street, or to some 1 horse town in the middle of nowhere. Because of their mandate for service everywhere at a flat rate, they are bound to lose money. First thing to do is to scrap weekend delivery.

 

[LuckyKBoxer]

didnt we have a recetn thread here about the usps that said it was profitable?
I guess someone got their story wrong.

 

[5-0 Kenpo]

But you wont get a better deal on sending a letter. 44c vs a couple bucks at ups/fed ex.

That's because UPS and FedEx are excluded by law to send what is considered first class mail. Therefore they have to charge more because their costs are more.

And USPS cgharges the same to go across the street, or to some 1 horse town in the middle of nowhere. Because of their mandate for service everywhere at a flat rate, they are bound to lose money. First thing to do is to scrap weekend delivery.

This isn't exactly true. For instance, I had to send packages this year for Christmas. The postal clerk charged me different rates based on where they were being delivered.

If you go here: http://www.usps.com/prices/welcome.htm?from=home_wouldyouliketo&page=seepricing

you will see that for several categories of domestic mail, such as Express mail, Priority mail, and Parcel Post, the Post Office charges different rates based on distance.

 

[cdunn]

didnt we have a recetn thread here about the usps that said it was profitable?
I guess someone got their story wrong.

No, the information presented in the thread clearly indicated that profitability was in the past, not in the present. The USPS does not deal well with gasoline over about $2.00 a gallon.

 

[CanuckMA]

This isn't exactly true. For instance, I had to send packages this year for Christmas. The postal clerk charged me different rates based on where they were being delivered.

If you go here: http://www.usps.com/prices/welcome.htm?from=home_wouldyouliketo&page=seepricing

you will see that for several categories of domestic mail, such as Express mail, Priority mail, and Parcel Post, the Post Office charges different rates based on distance.

But first class mail is flat rate. That's a good chunk of their business. UPS/Fedex would hurt too if they had a good portion of their business at a national flat rate. Especially one that low.

 

[5-0 Kenpo]

But first class mail is flat rate. That's a good chunk of their business. UPS/Fedex would hurt too if they had a good portion of their business at a national flat rate. Especially one that low.

True to the first sentence. But the second sentence is not. The majority of the USPS business is in bulk business mail, not first class mail.

And I wouldn't think that adding first class mail, seeing it's small size, would significantly hurt them. Don't know this for a fact though.

 

[CanuckMA]

Has nothing to do with size. It has to do with having to charge the same rate to deliver everywhere in the continental US.

I still think that elminating Saturday delivery would go a long way to help curb costs at no real disadvantage to the public.

 

[ballen0351]

I think some of the problem is there are 2 many post offices. I live in a small town of about 3000 people. There are 5 post office buildings within 10 miles of my house. Every small town near me has 1. I live about an hour and 25 min from my work I just counted 14 post offices I can think off the top of my head that I pass going to work Im sure there are more Ive never seen