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Communications The Almighty Buck United States

USPS Reports $15.9 Billion Loss, Asks Congress For Help 473

Posted by Soulskill
from the write-a-letter-to-your-representative-but-don't-mail-it dept.
New submitter Gaildew2 writes with news that the embattled United States Postal Service has posted a $15.9 billion loss over the past fiscal year, more than three times the amount it lost the previous year. "The USPS, which relies on the sale of stamps and other products rather than taxpayer dollars, has been grappling for years with high costs and tumbling mail volumes as consumers communicate more online. In September, the Postal Service hit its $15 billion borrowing limit for the first time in its history. That leaves it with few options if it suffers an unexpected shock, such as a slowdown if lawmakers are unable to prevent the year-end tax increases and spending cuts known as the 'fiscal cliff.' ... Postal officials want Congress to pass legislation that would allow the agency to end Saturday mail delivery and run its own health plan rather than enrolling USPS employees in federal health programs, among other things."
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USPS Reports $15.9 Billion Loss, Asks Congress For Help

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  • Mass Mail (Score:5, Insightful)

    by Anonymous Coward on Friday November 16, 2012 @10:16AM (#42001353)

    The only people using mail anymore are junk mailers. And they get an ENORMOUS discount to send out thousands of flyers and coupons. So let's raise our taxes even more to prop up a bunch of spammers. If you don't, the union gets angry and leans on politicians. That's just good policy.

    • Re:Mass Mail (Score:5, Informative)

      by The Moof (859402) on Friday November 16, 2012 @11:05AM (#42001977)
      Well, I still receive packages and my bills via the USPS, so I imagine shutting it down would cause some problems in those departments.

      And they get an ENORMOUS discount to send out thousands of flyers and coupons

      Mailing companies don't get enormous discounts. They actually do the majority of the USPS's work themselves. They take care of the presorting and processing of all the mail, and will even do drop shipments of the presorted mail to the delivery facilities directly. The only real part that the USPS does is take the sorted mail and have their carriers deliver it. It removes a large portion of the process, such as address analysis and routing processing. USPS also get revenue from the mandatory quarterly software updates used for sorting and processing of the mail.

    • Re:Mass Mail (Score:5, Insightful)

      by Shining Celebi (853093) on Friday November 16, 2012 @11:07AM (#42001997) Homepage

      The USPS doesn't run on taxes, they are self-sufficient. That's why they're not asking for a bailout, but for an end to Saturday mail delivery and other USPS cost saving measures. At the same time, the USPS is generally hobbled by Congressional requirements that they do this or that and overfund their retirement obligations and all sorts of other things.

      • Re:Mass Mail (Score:5, Informative)

        by Shining Celebi (853093) on Friday November 16, 2012 @11:08AM (#42002013) Homepage

        I meant to include this link - the USPS has a 13 billion dollar [federalnewsradio.com] surplus sitting in its retirement accounts.

        • Re:Mass Mail (Score:5, Informative)

          by Anonymous Coward on Friday November 16, 2012 @11:31AM (#42002349)

          THIS is important. Basically, Congress is making the USPS prepay pensions so many years out, that the beneficiaries of it haven't even started working for the USPS yet!

          Of course they're doing badly, no other company on earth is required by government to do that. Combine that with they're required to maintain postage rates which are under cost for the library system despite big, heavy books, and that it's legal for UPS and FedEx to use USPS for last-leg delivery*, congress has been working very hard to set up the USPS to fail.

          It was basically a trick to make USPS be the poster boy for government inefficiency: they get to make headlines every quarter about their financial woes.

          * UPS Mail Innovations, FedEx Smart Post, and some other services are products those companies sell which provide cheap shipping. Delivery is expensive, and these low-price options are offered at a cheap price because they remove the last leg of delivery, actually delivering to unique addresses. They handle most of the shipping themselves hitchhiking on other shipping methods when they have extra room and, when they get to the depot, just get offloaded to the local USPS hub and pay them a fraction of what they get paid to finish the delivery. This is the perfect textbook example of "Socialize the Costs, Privatize the Profits".

      • Re:Mass Mail (Score:5, Informative)

        by samkass (174571) on Friday November 16, 2012 @11:14AM (#42002069) Homepage Journal

        The USPS doesn't run on taxes, they are self-sufficient. That's why they're not asking for a bailout, but for an end to Saturday mail delivery and other USPS cost saving measures. At the same time, the USPS is generally hobbled by Congressional requirements that they do this or that and overfund their retirement obligations and all sorts of other things.

        Exactly. They are the only agency required to pre-pay all the retirement accounts in full rather than make regular installments into an interest-bearing account. Congress hobbled them with this, along with requirements to keep all rural post offices open and keep delivering on Saturdays, but provided them no way to recoup those costs. Almost all of the $15B is due to the retirement pre-payment requirements.

      • by bhlowe (1803290)
        Since 1970, the U.S. Postal Service is a semi-independent federal agency, mandated to be revenue-neutral. That is, it is supposed to break even, not make a profit. It has had deficits for years.

        Here their their plan. http://about.usps.com/news/national-releases/2012/pr12_0217profitability.pdf [usps.com]

        I would prefer they cut delivery to once a week. Use some savings to implement wider adoption of electronic communication. (Voting, taxes, motor vehicles, etc.) Too bad for NetFlix.

        • Re:Mass Mail (Score:5, Informative)

          by operagost (62405) on Friday November 16, 2012 @11:41AM (#42002491) Homepage Journal
          Most people still get at least some of their bills on paper. Having only one delivery a week would definitely cause some billing problems for customers, besides the fact that carrier routes would have to be redone to account for the volume-- because now he has a week's worth of mail. Know what your mailbox looks like if you go away for a week and place a hold on it? Yeah, it's going to be like that every week. And people's mailboxes, especially in apartments, are not going to be able to hold that stuff. Losing Saturday delivery is reasonable; going to weekly delivery is not.
          • by Americano (920576)

            Everybody assumes because they don't get much important mail that nobody else must get important mail, either - that's why you see comments like this about "nobody needing mail service more than once a week." But surely a middle ground exists between "once a week" and "every day" that would also allow the USPS to save a little money?

            Given the increasingly electronic nature of things like this, I think the USPS could probably explore:
            1) Any address gets service 3 days a week; each carrier could service 2

      • Re:Mass Mail (Score:5, Insightful)

        by orthancstone (665890) on Friday November 16, 2012 @11:51AM (#42002611)

        At the same time, the USPS is generally hobbled by Congressional requirements that they do this or that and overfund their retirement obligations and all sorts of other things.

        This. Pundits love to ignore the fact that the same Congressional tools that whine about USPS' inefficiency are typically the ones preventing USPS from enacting changes that would help its bottom line and potentially save it from needing massive loans.

    • Re:Mass Mail (Score:4, Informative)

      by jythie (914043) on Friday November 16, 2012 @11:14AM (#42002077)
      Well, no. One problem we have as techies is we tend to surround ourselves with similar people and forget that not everyone is online. All YOU might get is junk mail, but many people (usually at the low end of the income scale) still depend on USPS for the basic bureaucracy of living. Many people still, for instance, pay their bills by mailing a check. They do not have computers or Internet so the electronic option simply isn't open to them.
    • Re:Mass Mail (Score:5, Interesting)

      by rgbrenner (317308) on Friday November 16, 2012 @11:21AM (#42002173)

      junk mail subsidizes first class mail. Junk mail does not need to be sorted, shipped across country, etc. The profits from junk mail are used to keep first class mail rates low.

    • Re:Mass Mail (Score:5, Insightful)

      by Sir_Sri (199544) on Friday November 16, 2012 @11:57AM (#42002677)

      Actually it's the rare but important stuff sent via the mail that you need to subsidize and why there are massive government postal programmes at all. If you can't check your bank balance online, if you need to send legal documents, contracts, bill etc. all of that needs to be accessible to people. Your voter registration any government correspondence etc. is all doable through mail. And mail services guarantee package delivery to the entire country usually (I'm not 100% sure how this works for the US with things like the republic of marshall islands or the like, which are sort of overseas independent dependencies of the US government, but not full blow territories like puerto rico).

      All of the junk mail crap is there to subsidize the actually important stuff. The effective monopoly postal services had on junk mail was an indirect subsidy, and I can't imagine Fed Ex wanting to go door to door delivering pizza coupons, but who knows. Even things like magazines, which, yes, people actually buy and read, would be seriously inhibited if they had to pay significantly more for delivery costs.

      Obviously, the basic problem all postal services have is their regulatory requirements don't line up with their financial ones in a changing market. Government needs to take a bit of a heavy hand in any industry where the goal is to actually reduce your workload. Medical providers should be looking for ways to reduce their number of people getting sick, police should be looking to reduce the amount of crime, the post office should be looking for ways to reduce paper mail, but at the same time you do need reliable cross country (cross world actually) mail delivery - because some of what is sent via mail is both important and needs to be kept inexpensive. If you want to spend 8 bucks to mail a letter to arrive tomorrow rather than 50 cents for it to arrive in 3 days fine, but for the people who cannot afford the extra 7.50 or whatever it is you don't want to lock them out of communication, most especially if they are your customers.

      As to the specific problem though, of mail employees being necessarily treated like career people and not minimum wage disposables, and all of that stuff, I don't really know. If the government is going to mandate they provide a service without a way to pay for it (e.g. saturday mail delivery) that's going to have to change or the government is going to have to step in financially.

  • by tekrat (242117) on Friday November 16, 2012 @10:17AM (#42001357) Homepage Journal

    Another F-22 crashed recently, and that's about the same value...

    • not quite (Score:5, Insightful)

      by nten (709128) on Friday November 16, 2012 @10:25AM (#42001437)

      even using the highest estimate of F-22 cost I could find we'd need to give them 44 F-22s. Raise rates on mass mailers perhaps? The only reason I check my mail anymore is to get information the government wants me to know about, car registration, voter registration, jury duty etc. If I could give an email address to uncle sam, I would be more than happy to do away with my mail address. Let it die.

      • by Binestar (28861) on Friday November 16, 2012 @10:59AM (#42001889) Homepage
        Sounds like a good investment actually. They could use those 44 raptors to bomb UPS, DHL and Fedex and they'll have more business overnight.
        • Re:not quite (Score:5, Informative)

          by jythie (914043) on Friday November 16, 2012 @11:17AM (#42002115)
          Sadly, they would not. Besides the retirement account issue, one of the restrictions the USPS runs under is they are not permitted to compete in the more lucrative areas because that would be 'unfair to the free market'. So they are essentially forced to both be self sufficient AND only offer services with thin or negative margins.
          • Re:not quite (Score:5, Insightful)

            by Darth Snowshoe (1434515) on Friday November 16, 2012 @11:31AM (#42002347)

            THIS. Congress tinkers with the mandate of the USPS, and then complains that its not making a profit. Don't you get it? It's not allowed to compete in ways that allow it to make a profit.

            Pretty much all the people around at the founding of the nation recognized the value of reliable, efficient, post service available for all. It's essential infrastructure. It's one of the reasons why business works in America. 'Based on the Postal Clause in Article One of the United States Constitution, empowering Congress "To establish post offices and post roads", it became the Post Office Department (USPOD) in 1792. ' - Wikipedia

            Geez, try sending essential items to your buddy on Peace Corps assignment in Africa, and you will quickly come to understand the value of a trustworthy, efficient and transparent postal service.

            And you can't just eliminate the USPS with a wave of your hand. Just figuring out how to do that would be a tremendous amount of work. Many laws and much legal precedent rely on the existence of the USPO, for instance. And still, weirdly, there are lots of things that cannot be sent over a wire.

  • USPS provides a great value -- just think about it, for about half a dollar you can get your first class letter delivered almost anywhere in the U.S. Alas, they are burdened with costs that other enterprises don't share, and their very existence seems to be against the flow so to speak. I think it's time to abolish the U.S. Mail monopoly and let it compete on a fair playing ground. If you didn't know, U.S. Mail has a legally granted monopoly. It's illegal for anyone but a postman to drop mail into postboxes

    • by h4rr4r (612664)

      We will not see a competitor unless you are lucky enough to get profitable service.

      Anyone deemed not profitable will have only a USPS that is in even worse shape. Thus will continue the mantra "Privatize the profits, socialize the losses".

    • by scarboni888 (1122993) on Friday November 16, 2012 @10:23AM (#42001427)

      And what about the people who live in places that are too expensive for privatized couriers to make a profit serving?

      What are they to do, take a flying leap?

      • Re: (Score:3, Informative)

        by Ichijo (607641)

        People who live in places that are too expensive for door-to-door mail delivery can pick up and send their mail at the nearest post office. Consider it part of the cost of living far from society.

      • Either that, or get subsidized mail service and then be referred to as moochers who refuse to take responsibility for their lives.

    • by Coisiche (2000870)

      Competition for postal services in a big country won't work. It's only profitable to deal with the high population centers because low population areas would hit profits too much to be worth doing.

      Kind of like a cable infrastructure for internet in a way.

    • by Qzukk (229616)

      When U.S. Postal Service (however they were called back then)

      The Constitution calls it "Post Offices and Post Roads".

  • The next time (Score:5, Informative)

    by nimbius (983462) on Friday November 16, 2012 @10:19AM (#42001379) Homepage

    a republican clutches the constitution and screams bloody murder, kindly ask them to stop wiping their jackboots on it. The postal service is in the constitution as well. Lets go back to bush junior, or as i like to call him, the acid reflux republicans just cant keep down:

    H.R. 6407; The Postal Accountability and Enhancement Act was passed in the Republican-controlled Senate two days after it was introduced in the Republican-controlled House. It was subsequently signed into law by Republican George W. Bush. One of the provisions in this hastily passed law requires the USPS to prefund ALL of it's retirees health benefits 75 years into the future. That's right. The USPS is supposed to set aside money for the future health benefits for people that haven't even been born yet.

    • Re:The next time (Score:5, Insightful)

      by oursland (1898514) on Friday November 16, 2012 @10:32AM (#42001547)
      THANK YOU! I wish more people knew that Congress decided to make demands on the USPS that no company could ever meet. And to think that the Republicans frequently politic on "running the government like a business" yet they make actions to ensure the government business fails.
      • Re:The next time (Score:5, Interesting)

        by h4rr4r (612664) on Friday November 16, 2012 @10:36AM (#42001601)

        This is because they believe "The government can't do anything right". When they get elected they make sure that statement is true. Why anyone would want to elect someone who believes this I cannot understand. It would be like going to an interview and telling them that you can't do the job and their business will soon fail.

    • Re:The next time (Score:5, Interesting)

      by Nimey (114278) on Friday November 16, 2012 @10:34AM (#42001573) Homepage Journal

      I strongly suspect the reason for that is because the Republicans don't like the idea of

      1) some part of the government actually working, because it puts the lie to their ideology, and
      2) some part of the government competing with the private sector, to wit UPS, FedEx, etc, even when those carriers aren't that interested in first-class mail.

      • So you think that because a certain political party doesn't like the idea of large government services, that they would actually sabotage existing government services in order to prove a point in an argument that no one outside of the beltway cares about?

        Without the US Postal Service, the US House of Representatives wouldn't have anything to do. All they do now is have unanimous consent votes on naming the post offices.

        Yes, we are both incredibly cynical people.

    • While that is indeed a ridiculous law, the USPS themselves says that the pension funding only accounts for around $5B. That means they would only be losing ~$10B / year without that ridiculous law.

      Still way too much goddamn money.

    • Yep, they knew this would happen too. Why would you (as a Republican) want to bankrupt any government controlled entity? Answer, to make way for a commercial service that would do the exact same thing.
  • by scarboni888 (1122993) on Friday November 16, 2012 @10:20AM (#42001391)

    The ridiculous retiree benefits mandate handed down from congress is pretty much the sole reason for this unnecessary debacle.

    No other organization is required to provide such an absurd level of retiree benefits payment so why is this insanity allowed to persist in light of the fact it could potentially doom the USPS?

  • by Joe_Dragon (2206452) on Friday November 16, 2012 @10:22AM (#42001413)

    in other places like Canada they don't have that any more.

  • The big lie (Score:5, Informative)

    by Anonymous Coward on Friday November 16, 2012 @10:23AM (#42001423)

    USPS is failing because it's been "grappling for years with high costs and tumbling mail volumes"?

    No. The truth is that the GOP has been trying to kill USPS by mandating the prefunding of all USPS benefits for the next 75 years!

    The Post Office would be solvent if it had reasonable requirements placed on it, but the GOP wants the public to think that is impossible.

    See: http://jonathanturley.org/2012/05/06/going-postal-in-washington-d-c-the-usps-the-postal-accountability-and-enhancement-act-of-2006-union-busting-and-paving-the-road-to-privatization/ [jonathanturley.org]

    • by Coisiche (2000870)

      What makes that ironic is that from seeing maps of state presidential election results; the GOP votes seem to dominate areas that a private enterprise performing mail carriage wouldn't go near because they'd be unprofitable.

  • by br00tus (528477) on Friday November 16, 2012 @10:36AM (#42001605)
    The health plan mentioned in the blurb is what did this, not the Internet. The 2006 Postal Accountability and Enhancement Act forces USPS to put 75 years of healthcare benefits into an account within 10 years, something which was noted as ridiculous when the law passed. Also, this law is filled with provisions that say the USPS is *not* allowed to modernize in this era of the Internet. The law was pushed by lobbyists from companies like UPS and FedEx. It makes no sense to blame this on the Internet, since the direct cause of this massive shortfall was the 2006 law which caused the shortfall, a law which also prevents the USPS from modernizing. A postal service is one of the few "socialist" government nationalized enterprises mandated by the U.S. constitution, the Republicans and private mail carriers are doing all of this to try to do an end run around the constitution they supposedly love so much.
  • by rolfwind (528248) on Friday November 16, 2012 @10:36AM (#42001607)

    1. Cut delivery in most areas, definitely the rural ones to every other day. M-W-F and T-Th-Sa. This will cut number of mail carriers and fuel and vehicles needed, as 1 carrier now will get two routes. Express mail has it's own carrier so that will be unaffected for the people that pay for it.

    2. Offer to take UPS and FedEx packages at the post office. People who want package for stuff they don't want delivered at home (theft, gifts, adult purchases, etc) have to rent a box at UPS or Fedex location at exorbinant rates. Let them rent a cheaper USPS box, get their mail and packages in one spot, come in, and bring some more business.

    3. Consider offering an electronic mail service, where you can send certified/registered mail or even purchase money orders and send them right off online - and have USPS print them out and deliver them like normal letters. Premium services without ever going to the counter. Lawyer offices rejoice?

    4. Call an international Postal Office congress. Get a cheap international tracking number and while at it, standardize all customs forms and registered form and other forms the world over with symbols. Too many packages get lost, too many registered packages with funny foreign postal languages go unheeded and the cheapest tracking number (unreliable) is with Express mail or Fedex/UPS with around $150 minimum ridiculousness, less for a business but still). Domestic tracking is like 0.75 cents. Even if they charge $5 for intl tracking, would be way cheaper than what's out there now and an untapped market. Especially for eBay sellers and the like.

    5. On the eBay sellers front, try to break down customs barriers, especially with the EU. It's ridiculous.

    • by xaxa (988988)

      4. Call an international Postal Office congress. Get a cheap international tracking number and while at it, standardize all customs forms and registered form and other forms the world over with symbols. Too many packages get lost, too many registered packages with funny foreign postal languages go unheeded and the cheapest tracking number (unreliable) is with Express mail or Fedex/UPS with around $150 minimum ridiculousness, less for a business but still). Domestic tracking is like 0.75 cents. Even if they charge $5 for intl tracking, would be way cheaper than what's out there now and an untapped market. Especially for eBay sellers and the like.

      I think all that exists. The language for post is French, the tracking numbers I've seen have started with an ISO country code (and foreign ones worked in my national postal service's website).

      5. On the eBay sellers front, try to break down customs barriers, especially with the EU. It's ridiculous.

      That's not much to do with post.

    • by rolfwind (528248)

      To add a few more:

      1. Be more proactive with the blue boxes. I have to literally drive 3 miles out of my way to get to the closest ones in my well to do suburb town. None of the major new shopping malls have one. And looking at the internet there is a huge pocket of none although demographically it makes no sense. The closest one is in a aging, dying stripmall in front of an empty supermarket that closed 5 years ago. In the last 10 years, 5 huge strip malls opened in the area, each one bigger than the

  • The USPS's primary role these days seems to be cramming my mailbox with unsolicited and unwanted advertisements, and providing landfills with a limitless supply of dead trees.

    Remind me again why we're still spending $billions to keep this going?

    • by Revotron (1115029)
      Because we need to protect our retirees' rights to print off funny e-mails in blue 24-point Comic Sans and mail them to their family and friends.
  • This is not about mail volume or heath costs. Try funding 75 years of pension value in 10 years. ..public or private entity.

    "Unlike every other governmental agency, the Postal Service is required to fund 75 years of retiree health benefits over just a 10-year span."

    Yep.... would not want the government to be successful at anything..except war and destruction. Oh and let us not forget....printing money for the rich.

    http://www.democracynow.org/2012/8/1/as_us_postal_service_faces_default

  • For example, some sizes of PO box are sold out in some areas. This proves that they charge too little for those.

    And there are surpluses of other sizes of PO box in other areas. This proves they are overcharging for them, and they lose PO box customers as a result.

    Charging the wrong prices is a good recipe for failure. Is it any wonder why the USPS is losing money?

  • Just in time for Christmas :)
  • Financial problems are not unique to the US postal service. The same kinds of issues are affecting mail carriers the world over. That said, our situation is particularly absurd. Keep in mind that this is the same entity that decided to eliminate clocks from post offices so that customers in line wouldn't have as clear a sense of how long they had been waiting. And they've got a tracking system that is complete and utter garbage. The service I've experienced from postal services overseas is better than what

  • It's tough to run what is a legacy business in decline when you can't change your service to suit the new environment due to the law. Case in point: Saturday delivery. It's just not necessary anymore and is hugely expensive, but they can't eliminate it without Congress getting involved.

    That's no way to run an agency. Congress should remove all these restrictions and let the USPS modernize.

  • by PPalmgren (1009823) on Friday November 16, 2012 @01:24PM (#42003461)

    As much as I agree with the problems congress saddled on the post office, it doesn't need to me repeated 20 times in the same comment section and modded to +5 insightful every time. Repeating something louder and more often only serves to irritate, people who didnt get it the first or second time have their head in the sand anyway.

  • by skelly33 (891182) on Friday November 16, 2012 @02:09PM (#42004051)
    All criticisms aside, it seems to me that the immediate problem can be addressed with a price adjustment on retail services. This PDF [usps.com] provides some interesting rough figures to play around with on page 4. I am specifically looking at the first figure ($66B in revenue), the second figure (167.9B "pieces of mail" delivered), and comparing with the reported $15.9B loss. Adding $66B revenue (all spent cash) plus the additional $15.9B loss gives us a total of $81.9B operational expenses.

    Now divide $66B in revenue by 167.9B pieces of mail delivered and we get an average revenue of about $0.39 per piece of mail delivered - that is less than the current price of a "forever" stamp which is $0.45. That means that some amount of mail is being handled for less than $0.45 which is averaging down the revenue per piece of mail by almost 14%. If we divide our total operational cost of $81.9B by167.9B pieces of mail, we get about $0.49 actual average cost per piece of mail. If we correct for the 14% averaging down, that brings us up to $0.56 per piece of mail.

    So I propose raising the base price of the forever stamps from $0.45 to $0.56 and proportionately for other lesser cost mail as well (e.g.post cards, flyers, etc.) Is 11 cents really all that much to ask? This doesn't seem like that big of a problem to me. Furthermore, I think this spoiled new generation of citizens has become so accustomed to their daily conveniences that it takes a hurricane Sandy to remind them of the value of a payphone. Will it take a collapsed postal system to realize the value of mail delivery? How much would it cost you to deliver the same piece of mail via an alternative commercial carrier? (hint: a lot more) How much would it cost you to personally deliver it and use none of them? (hint: unbearably more)

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