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$2.4 Billion Quarterly Loss for Postal Service

By Ed O'Keefe

Updated 12:56 p.m. ET

The U.S. Postal Service lost $2.4 billion during its third quarter and forecasts a $7 billion year-end loss, according to figures released Wednesday. Mail volume has dropped 12.6 percent so far this year, adding to a sharp decline in volume thanks to the economic recession that began in 2007 and Americans' wider use of the Internet.

On average, the Postal Service now delivers 4.1 pieces of mail to each address, down from 5.9 pieces in 2000. That decline has contributed to losses in 11 of the last 12 fiscal quarters, according to the new figures released by the service.

Though much of the debate regarding the Postal Service's future focuses on cutting mail service to five days per week, the removal of underused mailboxes and the potential closure of hundreds of Post Offices, the USPS' financial woes can be tied in large measure to roughly $7 billion in payments it must make each year to fund current and future retiree health benefits. Congress mandated the pre-payments in 2006 when it passed a Postal reform bill.

"We simply cannot afford these costs," Postmaster General John Potter said during a news conference announcing the financial results. The payments will contribute to a $700 million cash shortfall at the end of its fiscal year in late September, Potter said, unless Congress quickly changes the payment rules.

"If we were part of the federal government and treated as an agency, we would not be paying pre-funding to a retirement benefit trust," Potter said. "On the other hand, if we were in the private sector, we would not be pre-funding these retirement payments. So therein lies a bit of a dilemma."

Competing House and Senate measures to address the problem have cleared committees and are nearing full votes, but the bills would only provide temporary relief. A broader, long-term discussion regarding the future of American mail delivery is necessary, Potter said.

"The Postal Service does not want to do anything that would disrupt this economy. Over a trillion dollars moves through the mail in any given year and we are a hub of an industry that employs some 8 million Americans. We have no intention of doing anything that would disrupt the flow of mail," he said.

The Postal Service has taken several steps to reduce costs in recent years, including salary and hiring freezes and cuts to its workforce and mail routes. USPS now employs 630,000 career employees, down from a peak of 802,000 in 1999. More than 12,000 city carrier routes have been cut and consolidated with others since 2000. And it recently renegotiated more than 300 service contracts, saving $200 million.

The troubling numbers follow the Postal Service's classification as a "high risk" government agency, and come just days after it released a list of almost 700 Post Offices it will consider closing. Postal officials will testify Thursday at a Senate hearing on the mail service's future.

By Ed O'Keefe  | August 5, 2009; 10:52 AM ET
Categories:  Agencies and Departments  
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The slide rule.

The wrist watch.

The typewriter.

The land-line telephone.

The telegram.

And now, the letter.

Isn't progress beautiful?

Posted by: bs2004 | August 5, 2009 11:14 AM | Report abuse

Volume down 12.6% in 1 year. Yet no RIF (Reduction in Force) done or mentioned? Like GM they are reacting like dinasours. President Obama needs to force Post Master Jack Potter out and form a USPS Task Team.

Posted by: GRTopDog | August 5, 2009 11:20 AM | Report abuse

The USPS must be regulated by law to NOT COMPETE with FedEx or UPS and that is why they are loosing money.

They have the exact same tracking and reporting software as the other big delivery companies use but my post master tells me they by policy don't use their own software to the full extend for tracking.

That needs to stop...they must be allowed to use their tracking software just like FedEx does and just like UPS does and with their prices they are the best value in town. It's just even with a tracking number the post office can loose packages and most stops don't update the tracking number. Once they take the tracking number serious (or are allowed to) they can compete on even ground.

It's about time they rise to the occasion and use the resources they have to compete and take their job serious...100% of their job function.

Posted by: imZandor | August 5, 2009 11:45 AM | Report abuse

Disgraceful! The more they've raised the price the worse the service. You don't see UPS OR FED-EX posting those kinds of losses. Turn the postal service over to them or some other private concern who know how to run a successful business.

Robert Dorff

Posted by: rdorff | August 5, 2009 11:48 AM | Report abuse

Of course, the Post Office has always been a "Masquerader." and often appears as a private enterprise, when trying to sell different programs, depending on revenue posturing. In fact, it is a Government Agency. A very vital one too, for the real daily survival of private enterprises nationwide, and for Governments of all levels.
Now, certainly closures of postal facilities nationwide must be enacted to conserve taxpayer dollars and reflect demand load. The sooner the better, to reflect actual use vs. postal fees collected. Serious Postal worker reductions are necessary now too, and must be undertaken for the same reasons.
Interestingly, none of these economic difficulties would be upon us if our Governments would not micro-manage us through confiscatory tax policies. Business and the Post office would boom, if our Government would ease the tax burden on both the people and our businesses so we could grow and prosper.
Does that happen? Hell No, our legislators continue to hinder business and cripple our growth through a plethora of anti-free enterprise and tax regulations, essentially destroying American business!
Now we face the spectacle and tragedy of a Government controlled and financed healthcare system! Another death blow!
You think our Postal System is a problem?
Wait till a government screw-up makes the health care system hic-up! People will die and it will be ugly!
Our Colleges and Universities continue to turn out technically brilliant, but practically ignorant people who do not appreciate our historic fight for freedom and liberty. Our Congress continues to do its level best to defeat our prosperity and stifle business growth!
We need serious revisions of national policies through a through a thorough clean-out of elected officials and a fresh start! We need people in office who will truly help the people...not lie to us!

Posted by: USDefender | August 5, 2009 12:02 PM | Report abuse

The Post Office has been a joke in terms of efficiency and money management for decades (prior to the formation of the semi-government USPS). The organization is dominated by an insolent and consumer-hostile unionized work force , and going to the post office is about as pleasant as going to the dentist (at least the dentist gives you novocaine).
Postal rates used to go up due to increased volume. Now they are going up due to decreased volume. I agree with the writer (above) who has noted that the USPS does not adjust its labor force to correspond with decreased traffic, and it is locked in to an absurd union package.

Take a good look at the USPS because it is a great example of the bureaucracy that will eventually ruin nationalized health care. Petty and rule-bound bureaucrats with guaranteed federal jobs and the backing of AFSCME will remove all humanity and public service from any socialized medicine scheme, even if Obama works to balance budget deficits and avoid rationing.
I once worked for the government, and I recall my boss once remarking that the President and elected officials were, to the bureaucrats, "migrant labor" (here today but gone in 2 to 4 years) while the bureaucracy is "forever". The institutionalized greed and sloth of the USPS is a clear warning to those who are foolish enough to think the government can run health care.

Posted by: MARKM2 | August 5, 2009 12:39 PM | Report abuse

"More than 12,000 city carrier routes have been cut since 2000."

What does this mean? How is the mail still being delivered to every address?

Posted by: RossEmery | August 5, 2009 12:47 PM | Report abuse

So what if it lost money this year.

Do we ever hear about the years it breaks even or comes out ahead? No.

And how many profitable years do you think it's had since it began in the late 1700's? Probably quite a few.

You can still send a letter anywhere in the US for under 50 cents; that's pretty good. And Priority Mail still goes anywhere for $4.50. That beats FedEx or UPS.

Posted by: gce1356 | August 5, 2009 1:08 PM | Report abuse

How many readers would be willing to cut their 6-day-per-week mail delivery down to 2 or 3 days and let FedEx and UPS pick up the slack? Not many, I'll bet.

Posted by: gce1356 | August 5, 2009 1:12 PM | Report abuse

$2,400,000,000 loss for the quarter? Almost sounds like the national deficit... WHAT? They just raised rates to 44 cents. And mostly what I get is junk mail.... Hey folks, the US postal system is better than CanadaPost (which by the way, rates last in the developed world) so it IS NOT DEAD LAST. Go to the developing world if you want really good service. As to cost containment? Why does a monopoly need to advertise (their poor service) on TV?

Posted by: yard80197 | August 5, 2009 1:53 PM | Report abuse

Maybe they should charge more for delivering junk mail. That's all I seem to receive these days.

Posted by: cdporter00 | August 5, 2009 2:35 PM | Report abuse

Since when should it be a requirement for a public service to turn a profit? Does the Public Health Service make a profit? Does the Coast Guard turn a profit?

Posted by: postman2 | August 5, 2009 2:37 PM | Report abuse

Oh gee.. let's see: E-mail and online bill pay free. Local faxes no cost otherwise 5 cents per page. Decisions, decisions.

Posted by: tuzoner | August 5, 2009 3:05 PM | Report abuse

Add this to the list of incompetent attempts from a government agency trying to run a business enterprise.

Anyone care to add health care. Of course you do; as long as it's "free", right libs?

Funny thing is; you'll be the ones screaming the loudest when it turns to sh^t.

Posted by: Bcamp55 | August 5, 2009 3:09 PM | Report abuse

With the exception of those at the DMV, I've never seen a group of employees move slower. Hell, pay them a base salary and pay-by-performance (the number of customers server, transactions completed, etc.) bonuses. CERTAINLY, don't reward the Postmaster, and other high-ranking officials, for running a failing company. I suspect that currently, with benefits, all postal employees are making a very pretty penny.

Posted by: okemoddo_515 | August 5, 2009 3:14 PM | Report abuse

Get rid of home and business delivery and issue everyone a PO Box. Everyone would them just go to the Post Office to pick up their mail. Many towns and cities already do it that way.

Posted by: UnitedStatesofAmerica | August 5, 2009 4:22 PM | Report abuse

Most Postal employees retirement is Civil Service & If the retirees want health care they pay for it, it's not free. The Post Office has way to many chiefs & not enough Indians. On any given Saturday the managers out number the "workers" The Post Offices biggest problem is that it's Top Heavy. Get rid of some of the so called "Big-Shots"

Posted by: wasaUFO | August 5, 2009 4:23 PM | Report abuse

Postman2 wrote: Since when should it be a requirement for a public service to turn a profit?

Well, the answer is obvious! This public service as you call it (USPS) is NOT paid for by tax dollars as all other public services are! That makes a big difference!!!

USA posted: Get rid of home and business delivery and issue everyone a PO Box. Everyone would them just go to the Post Office to pick up their mail. Many towns and cities already do it that way.

Boy if we do that, unemployment will revert back to the Bush days of 600,000+/month! Probably not the best way to build up the economy!

Posted by: stwebb | August 5, 2009 4:35 PM | Report abuse

No surprise that the US Postal Service is suffering such enormous losses. Today I visited my neighborhood post office in Fort Washington, Maryland to purchase first class stamps and to claim a registered letter. Only two postal employees were on duty to service an extremely long line of very frustrasted and anger customers. Didn't seem to bother the on-duty postal employees at the counter who were either totally clueless or insensitive. After a ten miniute wait, I left without purchasing stamps or claiming the registered letter. Hopefully, the registered letter will be returned to sender and the sender will use a private vendor.

Posted by: PTaylor8336 | August 6, 2009 2:01 AM | Report abuse

The thing about the Post Office is that everything is always taken out of context because of how huge an organization it really is. How much of a % of total revenue is $2.4 billion if you generate about $55 billion a year? No worse than most businesses right now, and better than some. If you close 1,000 Post Offices, they will still have over 30,000. That's more locations than Starbucks and McDonalds combined. (domestic)

The Post Office is doing a lot of things right by consolidating and reducing staff, and when things turn around it is positioning itself for a good run. Don't be fooled by all the big numbers, USPS is on par with most businesses during this economic climate.

As a matetr of fact, they are the only shipping company on TV right now, while UPS and FedEx spend millions on legislature. And FedUPS just increased fuel surcharges again, and they also just posted losses.

Posted by: eddiealvarran | August 6, 2009 11:00 AM | Report abuse

There are many items which are sent by way of UPS by the customers of UPS, and delivered by the USPS, without noticeable additional payment to the USPS for such services. This lowers the cost of doing business for UPS, but increases the cost for the USPS.

Payment is require for USPS delivery services. These payments require the use of easily identifiable payment stamps of a sort. The stamps used are mandatory cancelled during the processing of each item either by automated machine or the hand of USPS employees. Some of the items require further process tracking based upon the level or delivery method requested by the customer, which are also, paid for by the customer through additional service fees.

Fact - cutting to the chase:
During an extended layoff period, I worked for the USPS as a Christmas Casual employee, through their overload and a little beyond. I worked for a single USPS station (the 2nd larges in the city) for a total of 3 months and asked by their corporate office to remain for an additional 6 months.

Upon several occasions, I saw and helped UPS drivers place volumes of UPS shipment items on to the USPS back dock for USPS delivery. I saw no evidence of any payments to the USPS on those items. I was unaware of any arrangements that were made between the USPS and UPS for these situations, but I was witness to this, first hand.

My Opinion:
I have never before experienced such a dysfunctional dictatorial management body that exhibited respect for and understanding of the needs of the personnel with whom they try to manage, reach a level nearly next to none. Viewed from the inside, the postal system appears to be very efficient. The biggest problem that I observed was with the USPS management body as a whole. The low moral they create among their personnel, the lack of understanding of effective planning, and the poor-to-bad utilization of troops in the postal trench warfare efficiency game, are the major causes of cost overruns in the USPS. I cannot speak for or against the upper management of the USPS effectiveness, except to say that much of what we see comes from the Top (stuff happens and flows down hill).

Posted by: jas-list-pdx | August 6, 2009 4:26 PM | Report abuse

PTaylor8336 how do you know they didn't care? Can you read minds? Management schedules the number of people to work the windows, not the employees. Like 90% of the people I hear complain/comment on the USPS, you also have no idea what you are talking about.

Several points of fact. The USPS gross income is $77 billion dollars. UPS pays the USPS $2 per package the USPS deliver for them. I might add that $2 is tacked onto the price they charge you to ship it. The USPS work force has been reduced in the last two years by almost 150,000 people.

Posted by: RCinOK | August 6, 2009 5:29 PM | Report abuse

jas-list-pdx -

"I saw no evidence of any payments to the USPS on those items..."

If, in fact, the USPS didn't charge for their services, and I highly doubt that's true, they're dumber than they look.

Posted by: okemoddo_515 | August 6, 2009 6:45 PM | Report abuse

Do you people not read before you post????

I just said that the USPS is paid $2 per package that it delivers for UPS and Fedex. It had the same deal with DHL before it pulled out of the US.

Posted by: RCinOK | August 6, 2009 7:45 PM | Report abuse

RCinOK -

Not that I don't believe your earlier post ("UPS pays the USPS $2 per package the USPS deliver for them...), but why should we take what you say as fact? We don't know you from Adam!

Posted by: okemoddo_515 | August 6, 2009 7:52 PM | Report abuse

I work for the USPS. I see them drop them off everyday, and someone has to count them and sign for them. So the USPS can collect the proper amount of money.

Posted by: RCinOK | August 6, 2009 9:03 PM | Report abuse

"I work for the USPS."

That's what I was looking for!

Posted by: okemoddo_515 | August 6, 2009 9:48 PM | Report abuse

Which means what exactly okemoddo? Would you care to explain your remark? Or are we supposed to read your mind?

Posted by: RCinOK | August 6, 2009 11:12 PM | Report abuse

No offense intended... I think you're taking it the wrong way.

Many posters pull "facts" out of their ass.

I was looking for some type of validation that you weren't one of them, and you supplied it.

Posted by: okemoddo_515 | August 6, 2009 11:35 PM | Report abuse

My apologies okemoddo, I did take your post the wrong way.

When that program started, they call it "Taking them the last mile," we were told that the USPS would be paid $2 per package delivered. There were numerous press releases on it, which of course went mostly unnoticed. Unless you worked for the USPS.

Posted by: RCinOK | August 7, 2009 6:59 AM | Report abuse

One of the pitfalls of text communication!

I gotta tell you, out where we live (high in the mountains of Colorado), postal delivery is bad on a good day. We're lucky, some days, if we even GET deliveries. When we do, the carrier is frequently late (11pm, midnight), doesn't deliver to the correct mailbox, claims that package or registered mail deliveries were attempted when the weren't, etc.

I've made numerous complaints to UPS, about not receiving packages on a due date, only to find out they were passed-off to the USPS.

Posted by: okemoddo_515 | August 7, 2009 9:48 AM | Report abuse

If you have a minute, take a look at:

Posted by: okemoddo_515 | August 7, 2009 10:10 AM | Report abuse

I've seen that video before. The one thing that isn't pointed out is that that was an UPS package that was left at the wrong doorstep. The carrier had back problems and couldn't lift it. Should he have left it where it was? Yes. He thought he was doing the person it belonged to a favor by moving it too the correct house.

As for your other comments, I can only tell you that, by the rules, every piece of first class mail is to be delivered the day it comes in. Every box is to be "serviced" every single day. I would almost bet that your carrier is a contract carrier. They're not career employees. They are usually short term, I think they bid on a four year term. And it always goes to the lowest bidder. I know of several contract routes that are sub-contracted. The people that hold the contract have not once ever delivered mail...ever. And management has less control over them than they do a regular career employee.

The only other thing I can think of, saying you live in the high rockies, is possible road conditions. Are the roads sometimes impassable? We aren't supposed to deliver down roads that we deem to be unsafe. And it is the carrier that decides that.

If you have ongoing problems either contact the office that that carrier is working out of. If that doesn't work call the district office that you come under. Likely its in Denver. Call 1-800-ASK-USPS. They should be able to aim you in the right direction.

Posted by: RCinOK | August 7, 2009 3:50 PM | Report abuse

"I would almost bet that your carrier is a contract carrier."

And you'd win that bet!

How can the USPS, just like any other employer, not hold contract employees to the same standards as regular employees? I've complained numerous times, as have many of my neighbors, to the "supervisor," but problems never seem to get resolved.

As far as weather conditions go, I'm pretty realistic as to not expecting deliveries if hazardous conditions exist, but we're talking about non-deliveries if there's even TALK about snow!

Posted by: okemoddo_515 | August 7, 2009 5:50 PM | Report abuse

If you bid on a contract, and are awarded that contract, it's yours for the length of it. Like I mentioned, I believe it's 4 years. There really isn't much that can be done about it. I don't think they even have to go through background checks or training like the rest of us do.

I'll tell you a story from a couple of winters ago. The mail is moved around by private contract companies. We had a big ice/snow storm here. Whoever it is that owns the company that has the contract to transport the mail from the central part of the state told his people not to drive. He was afraid of a wreck, lawsuits, workers comp, so on. But because of that decision the Social Security checks here were 5 days late getting delivered. The old folks were calling up and screaming about it. Nothing we could do. I might add we delivered our routes every day through out that.

You might as well get used to it. The ultimate goal of USPS's national management is to make ALL routes contract routes.

Posted by: RCinOK | August 7, 2009 6:19 PM | Report abuse

I thought the P.O. was being run as a private business, just like
Las Vegas. Someone skimming ? Or is the E-mail and on-line
banking taking the play away. Maybe we need a Mail Czar.

Posted by: lengyson1 | August 10, 2009 11:07 AM | Report abuse

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