You’ve Got Mail, But the Postal Service Is Losing Billions

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Raising the price of our postage just isn’t doing it for the U.S. Postal Service which reports a $2.4 billion loss at the end of its third quarter (April 1 – June 30).

My kids did their part by sending lots of letters from camp, but most of America has seen a dismal decline in mail volume, which according to the Postal News has fallen by nearly 20 billion pieces in 2009 compared to the first three quarters of last year. Blame it on the widespread economic recession and electronic mail.

The good news is less paper. The bad news is the USPS which we depend upon through rain, sleet and health insurance legislation, is witnessing unprecedented declines in volume.

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Third quarter mail volume reached 41.6 billion pieces, down 7 billion pieces (or 14.3 percent) compared to a year ago. That’s the largest consecutive three-quarter drop in total volume since 1971.

The writing is on the wall in terms of the end-of-year predictions. The Postal Service projects a net loss of more than $7 billion at fiscal year-end.

The losses are compounded by an obligation to pay workers $5.4 billion to $5.8 billion  annually to prefund retiree health benefits. At the same time, the third quarter saw a rise in workers’ compensation expenses, which increased $722 million (or 198 percent) compared to the same period last year.

Postmaster General John Potter says the Postal Service is maintaining a high level of customer service while facing continuing economic challenges. Hey, tell that to the West Portal branch, where we still have to stand in slow-as-molasses lines even when it’s not so busy.

Securing financial stability of the postal service will require cost reduction efforts, according to Potter, as well as further review of the health benefit prefunding.

“It also will require that the Postal Service gain flexibility within the law to move toward the five-day delivery, to adjust our network as needed, to develop new products the market demands, and to work with our unions to meet the challenges ahead,” Potter adds.

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It’s pretty typical that cutting costs in these cases means fewer employees, just like at the supermarkets, where the checkout staff is being phased out by machines and the lines keep growing.

Work hours were reduced 88 million hours in the first three quarters of fiscal 2009 and the USPS says it is right on target of its goal to cut work hours by more than 100 million for the entire year.

“That’s double the rate of last year’s successful work-hour reductions and the equivalent of 57,000 full-time employees, or 8.6 percent of our full-time workforce,” says Joe Corbett, chief financial officer and vice president.

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How long do you think until we are using automated postal centers for everything we ship?

Images: USPS

Luanne Bradley

Luanne Sanders Bradley is the West coast Editor at EcoSalon and currently resides in San Francisco, California.