EarningsCenter

Post Office Loses $3.5 Billion as 2011 Cash Crunch Looms

The United States Postal Service delivered bad news on Thursday, reporting a $3.5 billion loss for its fiscal third quarter due to lower revenues from the continuing drop in mail volume and increased costs from retiree health benefit expenses.

The USPS lost $1.1 billion more than it did during the third quarter of 2009, and has now posted net losses in 14 of its last 16 quarters. Operating revenue fell to $16 billion, $294 million less than during the same period last year, while operating expenses increased to $19.5 billion, $789 million higher than last year. Officials are projecting that the postal service could run out of cash in 2011 unless relief it is seeking from Congress is approved.

"Given current trends, we will not be able to pay all 2011 obligations," said USPS chief financial officer Joseph Corbett in a statement. "Despite ongoing aggressive cost reductions totaling over $10 billion in the last three years, it is clear that a liquidity problem is looming and must be addressed through fundamental changes requiring legislation and changes to contracts."

The biggest changes Corbett is seeking are moving the postal service to five-day delivery and the deferment of its congressionally-mandated $5.5 billion annual payment to pre-fund its retiree health benefits fund.

Saturday Delivery Is Mandated by Law


Going to five-day delivery would allow the postal service to save money by continuing to reduce worker hours in line with the unprecedented decline in mail volume over the last few years. Third-quarter mail volume dropped 1.7%, or approximately 700 million pieces compared to a year ago, and volume is down 20% since 2007 as an ever growing number of bills, payments and business-related documents are being handled via email and online banking. Postal Service spokesman Gerry McKiernan said the proposal to drop Saturday delivery has been filed with the Postal Regulatory Commission and will be ruled on after the commission takes private sector testimony in September.

However, even if the commission responds favorably to the proposal, Congress must also act by removing the requirement of six-day delivery from the language in its annual appropriations bill. Six-day delivery by the post office has been legislatively mandated since 1983.

The deferment of payments to its employee retirement fund will simply give the agency more time and flexibility to meet funding requirements as it reacts to major changes in how customers send and receive mail. McKiernan noted that last year, Congress allowed the Postal Service to defer $4 billion of its $5.5 billion payment until 2017. "We are asking for similar relief this year," he said.

Additional relief may come with the proposed price increase for mail delivery requested in July, which would raise the price of a first-class stamp from 44 cents to 46 cents. The post office says the proposed increase, which would go into affect on Jan. 2, 2011, would raise $2.3 billion during its first nine months. Contract negotiations scheduled to take place this fall with unions over jobs and benefits may also help the postal service avoid a liquidity crisis next year.

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420 Comments

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madison

How shocking, another mismanaged federal agency failing.

September 15 2011 at 11:17 PM Report abuse rate up rate down Reply
Diane

The Postal Service needs to find a new way to generate revenue. All post office employees should buy stamps and mail there bills instead of using the internet. There should be a way where some bills have to go through the mail system to help support the Post Office.

There are so many games online, the Post Office should start creating games in the news papers and have people use the mail system to enter.

Publishers Clearing house is always sending out contest and trying to get you to spend money. The Post Office needs to do the same. . Why does the Post Office not sell mail boxes. I hope the Post Office finds a way to get through these tough times. The Post Office needs to create its own credit card just like these other companies.

September 08 2011 at 7:25 AM Report abuse rate up rate down Reply
me

Put the post office on a 401k retirement like private companies where employees match it, make postal employees pay 6 percent of there health care premiums each month, freeze all post office wages for 4 years, no raises because they are way over paid, freeze all post office managers bonuses for 10 years because when i was a temp at xmas many years ago when i was young some low level manager said he just got a $10,000 bonus for xmas because we did more work , thats just foolish waste of taxpayer money and they are just giving it to each other for whatever reason. this will put the post office back on track

June 23 2011 at 12:25 PM Report abuse rate up rate down Reply
practicalmatter1

I believe that we need to keep the post offices open on Saturdays. Here is my rational. How many days a week do we really need mail delivered to our home or business? 6 days for delivery allows us to cut delivery in half, a third, or one sixth. If we use 6 days we can give everyone delivery 3 days a week (6 divided by 3 = 2 routes per carrier) , M/W/F or T/Th/S. Of the 343,300 postal carriers in 2008, we may be able to cut about 1/3 of them. Using their average 2008 salary of $48,900 that is a savings of over 5.6 Billion dollars a year. Add to that the savings in fuel, trucks, benefits, mechanics, etc., we could balance their budget. Increased income can be generated by allowing individuals and/or businesses to purchase mail delivery 6 days a week if they feel that they need it (say $10 per month). By maintaining the 6 day per week delivery, as mail continues to decline in volume, we would eventually be able to cut delivery to 2 days per week (6 divided by 2 = 3 routes per carrier). Postal Carriers should then be first in line to be HIRED by other parts of the government (or reassigned) instead of others trying to get in on the government retirement program. Most of this could be accomplished thru attrition and retirement. It's really not that difficult. It's a PRACTICAL MATTER. Just takes some political will of the politicians!

November 13 2010 at 5:12 PM Report abuse rate up rate down Reply
pghpensfan

We can all thank the Unions for this. Negotiating pensions (The private sector does not even know what these are) and fluffy health benefits after retirement. Why do those who work in union jobs (Many of these are public sector) deserve luxuries like this while everyone else has to provide for their own retirement and rely on Medicare? Because the CBA's are negotiated by politicians, not businessmen. Unions have the politicians in their pockets (at least here in the People's Republic of Pennsylvania), so they always get some great concessions. In response, the Unions deliver a voter bloc to the Democrats, Can you say conflict of interest?

August 06 2010 at 8:04 PM Report abuse +1 rate up rate down Reply
danceshorses

I agree that they should not allow junk mail.. I get my mail through a P O Box and the junk mail goes in the lobby trash can for them to dump. At least they have to deal with dumping fees for all the junk mail. If they raise the mail rate too high I will close the P O Bx and go all internet. They charge $40.00 per year just to rent the smallest box.

August 06 2010 at 5:43 PM Report abuse rate up rate down Reply
BFalasca

I have stopped sending post office because all my mail is getting lost and they don't guarantee priority mail. It is going to wrong addresses they seem to not be able to read of something. In just the past month 3 packages have been lost of damaged. You sould not have to pay extra to have your mail delivered to the correct address on the package. Also my mail has been opened and merchandise missing in route to my customers. Just not very responsible that is why they are loosing money they are loosing peoples stuff and I think it is not right they are not responsible for your mail. I will be taking my business else were and I think a lot of people are doing the same. There is a big write up about it at consumer afairs site. Had to post my feelings on the whole subject. UPS is cheaper and insures it besides for a lesser amount. You should still not have to buy insurance to have them be responsible to deliver you mail to the proper address people are just fed up I am sure that is a lot of it.

August 06 2010 at 4:46 PM Report abuse rate up rate down Reply
1 reply to BFalasca's comment
dpeltz1961

If you send packages like you spell no wonder they get lost, Holy Crap!

October 08 2010 at 8:48 PM Report abuse rate up rate down Reply
tdu1vme

The U.S. Postal Service provides the most inexpensive, efficient, and secure public delivery service in the world, as attested to by anyone who has lived abroad and experienced foreign delivery nightmares. Pilfered mail crime is held to an extreme minimum by the efficient Postal Inspection Service, which has long had the highest conviction rate of any federal law enforcement agency - they always get their man - or woman - in such relatively rare instances, thus maintaining the integrity of the mail!

However, in addition to providing the best and most economical delivery service in the world, the Postal Service also provides what amounts to a national neighborhood security watch or lookout service, in that the letter carriers, who deliver to every address in the country (even 20 miles out in the BOONIES for a 44 cent stamp!) are familiar with their patrons and their habits. As a result, virtually every week, somewhere in the country a letter carrier notices something amiss, such as the mail piling up or a fire starting in a residence, and saves one or more lives with their prompt action. You can go to http://www.postalnews.com and read about such instances usually at least one a week somewhere in the country. The most recent one is on their website for August 1 and involved an alert letter carrier in Kewanee, Illinois. Check it out by going to the site and scroll down to Sunday, August 1, or read about it at the direct Link, http://www.pjstar.com/news/x2083433793/Kewanee-mail-carrier-saves-woman

In addition, something else to consider before tampering with the Postal Service, is that it already provides the secure infrastructure, connecting every address in the country, which will be VITAL if and when a CYBER-ATTACK CRIPPLES the INTERNET! DO NOT DISMANTLE THAT EXISTING INFRASTRUCTURE - IT WILL BE VITAL TO THE SURVIVAL OF SOCIETY AS WE KNOW IT in such instance!!! And anyone with a brain who is up on current events and world news knows that our enemies, as well as just plain computer hackers around the world, are continuously working overtime to mount such an attack!

As other Posters have pointed out, when compared to the delivery services of other countries, even at 75 cents for a First Class stamp, that would still be a bargain for the excellent service provided by the United States Postal Service!

Yes, I am a 36 year Postal retiree, who worked his butt off, and I'm proud of it and proud of our excellent Postal Service and the men and women who provide the teamwork that produces such excellent, secure, dependable, and economical service !!! For the sake of our country, DO NOT DISMANTLE IT!!!

August 06 2010 at 4:34 PM Report abuse rate up rate down Reply
NGWDIT

Cutting out Saturday delivery is a no brainer..do it now.

The US Postal Service should deliver to business addresses five days a week. I would be willing to have my residential mail delivery cut back to Monday / Wednesday / Friday. If I need something overnight, I can request the sender to send overnight through UPS or Fed Ex.

My mailman now drives to my house six days a week, essentially to deliver junk mail. I may receive two to three pieces of mail a week that are necessary...and all of those pieces of mail could be delivered on Monday, Wednesday or Friday without creating me any problems.

If citizens were offered a tax break of $2,000 per year per household if they agreed to accept residential mail on Monday / Wednesday / Friday only, I wonder how many people would sign up? I would. Those not wanting the tax break could still receive their residential mail six days a week. The reduced cost of cutting back residential mail delivery to five days a week should more than cover the cost of the $2,000 tax cut.

August 06 2010 at 3:30 PM Report abuse -5 rate up rate down Reply
2 replies to NGWDIT's comment
erritz

YOU MUST HAVE BEEN A POSTAL MANAGER AT ONE TIME LOL

August 06 2010 at 3:35 PM Report abuse +3 rate up rate down Reply
Dale & Tami

The Post Office dosn't get any money from your taxes. All their maoney comes from the sale of stamps and services...so there would be no tax cut for you to get less service.

August 06 2010 at 4:01 PM Report abuse +1 rate up rate down Reply
bearcat (stutz)

tax payers will bail them out dont we always

August 06 2010 at 3:28 PM Report abuse +1 rate up rate down Reply
1 reply to bearcat (stutz)'s comment
erritz

DING DING DING...AND THE ANSWER IS NO TAX DOLLARS ARE USED TO FUND THE POST OFFICE.

August 06 2010 at 3:30 PM Report abuse +5 rate up rate down Reply