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Postal Service anticipates $6 billion year-end loss

By Ed O'Keefe


Letter carrier Kevin Pownall gathers his deliveries from his truck in Philadelphia. The Postal Service continues to trim its workforce. (Matt Rourke)

Updated 5:09 p.m. ET
Check your mailbox: If the U.S. Postal Service has its way, this could be one of the last Saturdays you receive mail.

The mail agency is still determined to end six-day mail deliveries and close unprofitable post offices despite an anticipated $6 billion in losses for the fiscal year that ended Thursday.

The Postal Service earned about $68 billion in revenue in fiscal 2010, on par with last year, according to preliminary figures announced Friday. It lost money for the third consecutive year as customers made wider use of the Internet to pay bills, purchase goods and send personal messages. Letter carriers delivered about 170 billion pieces of mail in fiscal 2010, about 7 billion fewer than last year, Postmaster General John E. Potter said Friday.

The announcement capped a difficult week for the Postal Service: Regulators denied a request to raise stamp prices in January by two cents, and Congress decided not to reduce the $5.5 billion payment the agency is required to make by law to prefund health benefits for retiring postal workers.

Final revenue and volume figures will be released later this fall, Potter said.

"We have not changed in terms of what's next," he said Friday in a meeting with reporters. "We need to try and grow revenue. We'll continue to use any tool that we can."

Potter wants the agency to be able to set delivery schedules and routes without interference from Congress. He'd also like to sell products and services besides boxes and stamps -- perhaps insurance, banking and cellphone services.

But Sen. Susan Collins (R-Maine) and other Republican lawmakers say Potter should find deeper spending cuts before lawmakers approve new revenue streams.

"The problem is that every three years it seems the Postal Service has been in financial crisis," Collins said, referring to similar periods in 2003 and 2006. She plans to introduce new postal reform legislation and is urging Potter to review spending cuts proposed in a series of watchdog reports released last week, including consolidation of regional offices.

The Postal Service is in the midst of a 10-year plan to trim $120 billion in costs, Potter said. It now employs about 584,000 full-time workers, a drop of about 100,000 career positions in three years, he said.

"It's been a tough few months for the Postal Service in terms of its management and relations with Congress," Ruth Y. Goldway, chairman of the Postal Regulatory Commission, said in an interview this week. "But on the other hand, it appears from what we can see on the street that things are improving. They don't have all their problems solved, but volume is going back up, and they have their costs under control."

Amid declining revenue and congressional gridlock, Potter, the longest-serving postmaster in U.S. history, didn't rule out leaving the Postal Service as some aides and other observers have suggested.

"I'm going back to my office," he said Friday when twice asked if he plans to retire.

Leave your thoughts in the comments section below

By Ed O'Keefe  | October 1, 2010; 12:08 PM ET
Categories:  Postal Service  
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Comments

Just think if the USPS did not have to give your congress 5.5 billion dollars a year (something no other company or govt agency is required to do) they would have only lost1 Billion. And if your Congress gave back the 50-75 Billion they OVERCHARGED the USPS for civil service retiremnt the USPS would have a profit of 49-74 Billion dollars. Not bad for a company that charges the least postage in the world..

Posted by: Brian417 | October 1, 2010 1:54 PM | Report abuse

USPS jobs should all be minimum wage.

Take a cue from WalMart - pay next to nothing and let the government pick up your worker's health care - then you'll turn a profit.

Posted by: ThrityYearResident | October 1, 2010 2:37 PM | Report abuse

What's wrong with the Post Office? The Government regulations.

1) We do NOT get any tax money. We rely on postage sales for our revenue. No subsidy.
2) We have to deliver mail to every address no matter how remote from Pike's Peak to the bottom of the Grand Canyon, from California to Maine, from Washington State to Florida. We cannot choose just the profitable big cities.
3) When gas was over $4.00 a gallon we did not get to add a fuel surcharge to your postage.
4) We are not allowed to raise rates to keep profitable. Fedex is RAISING their rates 5.8% Jan 2011.

Salaries are almost 80% of our operating budget. Clerk, carrier, truck driver and mail handler salaries make up only about 40% of the payroll the rest is Management. Folks who don't even touch the mail.

The benefits of the Craft employees were negotiated by the Unions and Management. Want to complain? Complain about the Teamsters. carpenters, plumbers or the auto mechanic, who charges $70 - $100 an hour to fix your car.

The only MAJOR problem with the USPS is that the Government owes it $50 to $60 BILLION in retirement overpayments. Give the Post Office that money back and we won't be having this discussion.

Posted by: LarryA2J | October 1, 2010 9:30 PM | Report abuse

Brian 147 is pretty uninformed if he thinks the USPO is the only employer required to fund health benefits for retired workers. With the pending demise of the Pension Benefit Guarantee Corp., there is nothing like girding ones loins for future storms. Why should a 2% raise in rates be granted if CPI is .6 anyways? Seems like poor planing, management and pricing: make the junk mail advertisers subsidize 1st class, not the other way around. Make PUD boxes apply in congested urban areas to reduce door to door trudging. Stop Saturday delivery if necessary. Like Todd Rundgren: something, anything.

Posted by: jfries2 | October 3, 2010 1:47 PM | Report abuse

get rid of USPS monopoly on delivering mail to mail boxes only. let FedEx, USP and all other companies deliver to the mailboxes also.

Posted by: wabs | October 4, 2010 12:58 PM | Report abuse

the usps needs to close there doors it has an over payed workforce. Public teachers get attaked on all sites and get not paied overtime when the must take papers home to do der job effectivly in the classrooms. some schools teachers do not have books to teach there studens with because the states schoolboards have missmanaged the founds. the teachers should be regulated like the post office and get paid like the post-office then we will get some educated children what is a lot mor worth than the USPS. get rid of the USPS. uae that money to invest in a federal school system insted. and potter and the postal unions should go.

Posted by: wabs | October 4, 2010 1:11 PM | Report abuse

They may be loosing money,,,,but this 5 day a week is "CRAP",,,it's so they can get rid of all their Saturday sub's....It dose'nt cost them a dime....I work for the PO,,,and if they want to trim some money,,,they should start by having their POSTMASTER'S swipe a clock...They have control of the payroll,,,,wanna know how many POSTMASTER'S are not there,,but getting paid for it....My postmaster cut hour's,,,got rid of a clerk,,,,but because he is running the buiness under cost,,,he lined himself up for an 8% pay raise....The USPS is no better then FANNIE MAE or all the other crook's......

Posted by: canubelieve | October 4, 2010 2:52 PM | Report abuse

Oh yea,,,I forgot,,,Mr.Potter make's a base salarie of 275,000.00 per year....but with all he's perk's and bennie's the guy pull's in almost 500,000.00....FOR WHAT ????? The Post Master in a little town,,make's about 1,000.00 per week,,,FOR WHAT ??? I wonder what a POST MASTER in a bigger city make's........This is the reason they want to cut back......Just like the GOVERMENT,,,it's a case of "LET"S CUT,,CUT,,CUT,,,,but don't tuch my paycheck,," And while i'm at it,,,I might as well give myself a raise

Posted by: canubelieve | October 4, 2010 3:12 PM | Report abuse

How does a company with so many years of red ink in the book keep getting salary bonuses. John Potter and every postmaster that receives a bonus is a crook.

Posted by: Cherryusmc | October 4, 2010 10:46 PM | Report abuse

Jfries2, Brian 417 was NOT in error, just failed to succinctly explain the case. It is NOT current retirees health care that is costing the Postal Service the $5.5 billion-or so-annually, that is taken care of. It is the PREfunding of FUTURE (as in 50 or so years in the future) retirees health benefits. In 2006, Congress mandated the Postal Service to establish this fund...the ONLY agency of the federal government that is so required; Not Defense, Not Justice, Not Agriculture, Not Commerce, Not the CIA, Not ANY segemnt of the Federal Government EXCEPT the Postal Service!! Not any other level of government, be it state, county or local, nor is any corporation required to PREfund these benefits...most are pay as you go. Some few companies voluntarily prefund them , but not on a ten year period as the Postal Service has been mandated, but on a thirty or more year payment schedule.

With regard to the $75 billion overpayment to the Retirement System, the new Postal Service was told; "this is the formula you must pay on for past and future retirees". The Postal Service has maintained they were overpaying and in early 2010 presented a report which said, in essence; "we have overpaid about $75 billion over the last 40 years". OPM, Office of Personnel Managemnet, has, more or less, said; "it's only $50 billion or so".

The following needs to be done:
A) Cease/repeal the inequitable PREfunding requirement (paying current expenses out of current revenues is ok....or REQUIRE ALL levels of government and business to do the same prefunding on a similar schedule!).
B) Refund the overpayment from the retirement system and recompute the the contribution formula.
C) At minimum, take the overpayment from the retirement fund and use it to the prefunding of future retirees health benefits, and call the 2006 law moot. also make any nescesary computations so there is no future overpayment. Doing this, no draconian measures would be needed, nor probably no rate increase. Note: why a 2% increase with only a .6 CPI....rate cycles are usually for a minimum 3 years...year 1-surplus, year 2-break even, year 3- loss.

And before you ask, yes, I was a letter carier, from 1970 to 2003. I walked routes, delivered apartments, businesses, had curbline deliveries...worked through blizzard aftermath to 100+ degree heat and humidity...all in all, I loved it!! I still miss my customers and co-workers.

Posted by: gfrieders | October 4, 2010 11:47 PM | Report abuse

Come to the frisco PO gfrieders see if you still miss it. Clerk hours have Been cut to 20 hrs a week. Now all carriers are on waiting time. They keep saying it's a dristrict wide policy but coincidentally we are the only office affected. Potter is running USPS into the ground.

Posted by: Cherryusmc | October 5, 2010 7:37 AM | Report abuse

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