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Aug 18, 2009

Post Office needs to go First Class!

Leading The News...

---"The United States Postal Service (USPS) is in financial disarray, with plummeting levels of mail being sent and heathcare costs for retirees increasing, according to a report released Thursday by an investigative arm of Congress."
--- The report says the PO “has not been able to cut costs fast enough to offset the accelerated decline in mail volume and revenue.”
---"The USPS is experiencing its largest percentage decline in mail sent since the severe drop it took during the Great Depression...."
---"The decline is expected to result in a net loss of $7 billion, with total outstanding debt levels reaching $10.2 billion,..."


"I just had the idea of looking at the statistics for the Post Office, and I found out that the entire deficit for 2008 would have been covered by charging 48 cents for each first class letter rather than 45 cents. What would FedEx or UPS charge? (Not to say that I think all of the shortfall should be covered by first class mailings, but the numbers were so compelling that I stopped right there.)
http://www.usps.com/financials/anrpt08/pg47.htm
http://www.usps.com/financials/anrpt08/pg31.htm

Even today, the Post Office could turn a multibillion dollar profit by charging only 55 cents per letter. Can private companies even come close? If they ran it like a real busines, they would use their competitors as a guild of what the market will bear and say, raise the cost to 80 cents. When the howls of anger erupt, they could say they'll reconsider when their competition starts delivering letters for 79 cents....
If the postal service raised the price on each piece of mail by 11 cents, they would achieve a 25% net profit on operations. By the way, that includes over 10% of gross receipts held aside for retirement benefits, meaning these people will not burden social security or Medicare at retirement.

To qualify for 5x a week pickup, you'd need two or more pieces or packages. Pickup would only be when receiving mail, otherwise. Forget Saturdays. That costs extra, same as with FedEx. I personally live in a remote area that has delivery only 3 times a week, M_W_F, and for non-business addresses it wouldn't be that big a deal to adjust.

FedEx and UPS does not want the door to door delivery...they want your packages. They wouldn't touch the newspaper,junk bulk, and odd shaped envies with a ten foot pole! FedEx or UPS could NOT compete with 58 cent letter delivery costs nor would they want to.

The USPS is the only one doing what they are doing and they have the best systems in place to get the job done. Not many high volume businesses I can think of can handle a decline in volume without showing a loss, but what the hey, let's have it turn a profit! Raise that stamp to 75 cents and leave the package rates alone. Let the people and businesses adjust and rethink what is important to send down the road. Run the Post Office as a business!

2 comments:

  1. I worked for the USPS for 24 years. I retired at the beginning of 2009. But what people do not know is this: When the USPS wants to raise rates, that process takes 10+ months because the request has to go before the "Board of Govenors". Hearings are held that include input from Fed-Ex and UPS, as well as hundreds of major mailing houses across the country. Everyone has their input. Our competitors cry "unfair advantage" at every opportunity. And when all is said and done, it's the Board of Govenors who decide what the USPS can charge - not the USPS itself.

    We have to use our competitors to fly our product around the country, becaue we aren't allowed to have our own fleet of planes. When gas prices go up, it costs the USPS a million dollars per year for every penny of the increase. We can't pass that cost on to our customers like our competitors can, because we can't react like our competitors can - we have to go through a lengthy process that involves the Board of Governors. Despite the data that's been reported, productivity rates, service levels, and the elimination of internal costs have never been higher - and each year those levels rise!

    The System is broke. Granted there are union issues that are driving some costs - but that is negligible. The biggest impact to the success of the company is the internal fraud related to injury compensation. That has been a problem for years and years and years and no one has addressed it adequately in my opinion. If we treated that facet of the business like the private insurance companies do - IME's, private investigators, etc and PROSECUTED the fraud, we could eliminate billions of dollars in cost per year!

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  2. I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


    Susan

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