Postal Service Losses Continue in First Quarter;
Profitability Dependent on Comprehensive Legislation and Network Size Reductions
Shipping Services Business Continues to Grow
WASHINGTON — The U.S. Postal Service ended the first three months of its 2012 fiscal year (Oct. 1 – Dec. 31, 2011) with a net loss of $3.3 billion. Management expects large losses to continue until the Postal Service has implemented its network re-design and down-sizing and has restructured its healthcare program. Additionally, the return to financial stability requires legislation which gives the Postal Service typical commercial freedoms, including delivery flexibility, returns over $10 billion of amounts overpaid to the Federal Government and resolves the need to prefund retiree healthcare at rates not assessed any other entity in the United States.
Stronger than expected holiday shipping activity, driven by strong growth in online merchandise sales and successful USPS marketing efforts, helped the Postal Service grow its competitive Shipping Services business in the first quarter, with revenue totaling $2.8 billion, an increase of $179 million or 7 percent over the same period last year. However, declines in First-Class and Standard Mail of $650 million were 3.7% percent of total revenue and greatly exceed the gains made in the package business. First-Class Mail declines due to electronic migration of transactions are expected to continue for the foreseeable future.
Mailing Services revenue, excluding First-Class Mail parcels, totaled $14.5 billion, a decrease of 2.9 percent. First-Class Mail continued to decline, with revenue decreasing 4.1 percent compared to the same period last year. First-Class Mail revenue has declined nearly 15 percent and volume has declined 25 percent since volume peaked in 2006. While some of the decline is attributable to economic weakness since 2007, the more significant factor is the continuing transition to electronic alternatives.
“Technology continues to have a major impact on how our customers use the mail,” said Postmaster General and CEO Patrick Donahoe. “While it has helped us grow our Shipping Services businesses, it has had a significant negative impact on some of our much larger sources of revenue, particularly First-Class Mail. Revenue from Shipping Services represents about 17 percent of total revenue and, even with continued growth, cannot fully offset the decline in First-Class Mail revenue.”
To return to profitability, Donahoe has advanced a plan to reduce annual costs by $20 billion by 2015. The plan includes continued aggressive actions to generate additional revenue and reduce operating expenses. To reach the goal, the Postal Service also needs changes in the law. “Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health care costs,” Donahoe said. “The changes will give the Postal Service a bright future and provide the nation with affordable and reliable delivery for generations to come.”
Other details of the first quarter results compared to the same period last year include:
- Total mail volume of 43.7 billion pieces, a 6 percent decrease.
- Operating revenue of $17.7 billion, a 1.1 percent decrease.
- Operating expenses (before prefunding of retiree health benefits and the impact of discount rate changes for worker’s compensation liability) of $17.8 billion, a 1 percent increase.
- Transportation expenses increased by $105 million, or 6.3 percent, due to rising fuel costs. The Postal Service continues to decrease controllable costs, including an 8 million decrease in work hours, or 2.8 percent. Total compensation and benefits expenses decreased by $180 million, or 1.4 percent.
The Postal Service continues to suffer from a severe lack of liquidity. “Absent significant changes in the law to allow normal commercial freedoms, the Postal Service will default on both retiree health benefits pre-payments to the federal government due this year,” said Chief Financial Officer Joe Corbett. “Even if legislation changes or eliminates the prefunding payments, we may reach our $15 billion debt ceiling in the fall of this year.”
The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.
An old accounting trick was to borrow from the company’s pension fund by simply not funding it completely.
The opposite of this trick would be to hide money by overfunding those funds.
The reason for doing so is to hide money from the unions.
and here, we have the PO putting billions into these funds.
End result?
Billions hidden from the unions, while not affecting the actual solvency of the company at all.
The company can always get it back by under-funding the plan later.
In the meantime, they look like they are billions in debt, when they aren’t.
Here’s a better one.
The USPS borrows money it didn’t need to, to fund pensions that are already over-funded.
The USPS goes into debt, so the price of postage goes up.
Then, the public is paying postage to the USPS in order to provide money to the US government that is put into the general fund.
This results in the public paying extra money to the US Government by paying too much for postage!
Thus, we see Congress letting the USPS become the CASH COW it always was before the reorganization.
Just because they’re dumb, doesn’t mean they’re not clever!
Eli another toucdown via your hail mary as stated.
Qt. 1 revenue and volumes up yet loss of 3.1 billion. Restructuring necessary to reduce management levels and number from top to bottom. Cost effective operations must be maximized. Street delivery 6 days aweek is a total waste as in this day and age personal and business communication is increasing via electronic mail. Government and businesss are rewarding online use. OPM ENCOURAGES ONLINE USE AS TO RETIREMENT ACTION as well contact regarding annunities.Reducing street delivery from 302 days to 250 days saves on fuel and vehicle cost as well massive savings in carrier work hour cost.
Over extend postal services that are provided is an inverse curb that results in negative returns as the demand for the provided services do not exist.
American mailers do not need mail delivery forced on them which they have no demonstrated demand for as is measured in decline of first class volume resulting in decreasing revenue. Remove the cause of the effect which is ineffective cost operations from top to bottom. Congress and PRC SHOULD ACTION NEEDED AND ENFORCE TILL COMPLETED OR KEEPING LOOSING RECORD CONSISTENTAS WILL BE THE CASE.
Need the Early Out this year;no incentive needed for me.Tell both your Senators:Vote YES on S.1789.
Will have a surprise speaker for our Linquine Alfredo Comprehensive Legislation and Network Size Reductions speech.
At this rate the USPS should lose about $12 Billion this year. Only people that actually touch the mails should be compensated as thet are the ones moving it. Used to see pics of UPS and FedEX mgt with baseball caps on actually helping their employees do the job.
cut stupidvisors by 50% eliminate saturday delivery and possibility a tuesday delivery knock the delivery to 4 day weeks
APWU Members Urged to Take Action As Senate Reviews Postal Reform
Postal reform is a hot topic in Congress as the Senate prepares to vote on the 21st Century Postal Service Act, and APWU President Cliff Guffey is urging union members to contact their senators and let them know: Senate bill 1789 is only acceptable in its current form.
As lawmakers review the bill, Guffey is asking union members to let their senators know that S. 1789 must be passed. “ It is crucial that we get our point across,” he said.
“The bill would force the Postal Service to keep open hundreds of mail processing centers, and thousands of post offices,” Guffey said. “By giving more substantial financial relief, the bill would strengthen the Postal Service, save jobs, and drive customers our way,” he added.
“APWU members have done a great job of getting the word out to legislators about our concerns,” Guffey added. “At this critical time, union members must keep up the good work.”
S-1789 will;
Set strict service standards.
Allow the USPS to recover over-payments the Postal Service made to its retiree pension funds.
Allow the USPS to offer Early Retirement Incentives.
Adequately address the requirement that forces the USPS to pre-fund future retiree health benefits.
Prevent the closing of small post offices.
Protects 6 day delivery.
Call Your Senators:
202-224-3121
(Capitol Switchboard)
[Click here for direct #s]
Tell them you Support
S. 1789 as it is currently written
APWU Members Urged to Take Action As Senate Reviews Postal Reform
Postal reform is a hot topic in Congress as the Senate prepares to vote on the 21st Century Postal Service Act, and APWU President Cliff Guffey is urging union members to contact their senators and let them know: Senate bill 1789 is only acceptable in its current form.
As lawmakers review the bill, Guffey is asking union members to let their senators know that S. 1789 must be passed. “ It is crucial that we get our point across,” he said.
“The bill would force the Postal Service to keep open hundreds of mail processing centers, and thousands of post offices,” Guffey said. “By giving more substantial financial relief, the bill would strengthen the Postal Service, save jobs, and drive customers our way,” he added.
“APWU members have done a great job of getting the word out to legislators about our concerns,” Guffey added. “At this critical time, union members must keep up the good work.”
S-1789 will;
Set strict service standards.
Allow the USPS to recover over-payments the Postal Service made to its retiree pension funds.
Allow the USPS to offer Early Retirement Incentives.
Adequately address the requirement that forces the USPS to pre-fund future retiree health benefits.
Prevent the closing of small post offices.
Protects 6 day delivery.
Call Your Senators:
202-224-3121
(Capitol Switchboard)
[Click here for direct #s]
Tell them you Support
S. 1789 as it is currently written
Great job guys, PCR lady you got some great places lined up for us Big Shots to pat each other on the asses right?
The island of Capi? Some Focaccia Bread, some Toasted Ravioli, Limoncello Risotto a little Linquine Alfredo and wine…yes?
Issa/Ross will be flying in to be our guest speakers…no?
WOW, I AM SHOCKED. WE USE MORE OVERTIME THAN LAST YEAR.MISMANAGE THE WHOLE ORGANIZATION.WE WON’T CUT THINGS LIKE WALK SEQUENCE DISCOUNTS, POSTAL VISION, ODIS,TOP HEAVY MANAGER JOBS. NOW WE RAISE THE RATES ON PACKAGES, WHICH WERE ON THE RISE. WHO IS STEERING THIS TITANIC?
I know how to solve the money problem if congress is really serious.
$500 to punch a congressman in the face.
Issa and Ross would fetch at least half a trillion.
need to downsize 50% management.
The amount of financial loss by the USPS is of little concern by Politicans as they would state the loss is not out of tax payors dollar. Who pays if there is a real monatary loss? Politicans do not want any frugual steps taken in any areas they represent. PRC and Congress have no regard to reducing cost in reducing delivery to 5 days or eliminating or consolidating small community offices that have no justification to exist as service is readily available. Headquarters spendss on high salary and buying real estate in relocating high level managers and PCES. Districts and areas waste on dupliciation of services. District gets even with their own by moving them to an area position traveling needless around the country. Craft and management basic concern is to maintain employee position to bkeep dues comming in whether a position is needed to maintain a mneeded job or not.
If you believe these numbers, then you are as ignorant as USPS MANAGEMENT….pure bullshit….”ARTIFICIAL CRISIS” at its best………do they really think that us workers BELIEVE this crap….what a JOKE!!
When you say the word “poop” your mouth does the same motion as your butthole when your pooping, this is what he reminds me of whenever PMG Donoughpoop speaks #’s
It looks like the federal government has found another way to overcharge the post office. The FEHB must be dramatically increasing the “administrative” costs it is charging the USPS. How else can one explain the number of retirees going down, the cost of their current health care plans going up 3% per retiree and the cost to the USPS going up more than 9% to pay for this “insurance”.
From the 10Q…..
Expenses for Quarter I 2012, for retiree health benefits employer premiums increased $53 million, or 9.2%, from the same period last year. The major drivers of retiree health benefit employer premium expense are the number of current participants on the rolls and premium costs of the plans they select. As of December 31, 2011, there were approximately 469,000 participants, a decrease of 3,000 participants, compared to approximately 472,000 participants at December 31, 2010. Despite this decrease in the number of plan participants, retiree health benefit premium expense increased due to a 3.8% increase in the cost of premiums.
Does anyone believe these numbers? The Postal Service adjusts the numbers to what they want. It’s pretty obvious that they want to finish-off the Post Office as we know it. In my office we have so much mail that Tour-1 comes in early every night. It could also be that Management is so ineffective that they can’t MANAGE without calling overtime every night. It’s also obvious that we can’t keep on doing things the same way. We have to innovate and use technology to catch up with our competitors and branch out into other areas that they can’t or won’t go. I want the Postal Service to survive because it is a vital element to our economy and even our National Security.
usps needs to cut management by 35 percent,also reduce the postal inspection service.The unions need to allow more work flexibilty, such as evaluated routes.
First class mail subsidy for third class needs to be reduced. The postal service should go to five day delivery to conserve fuel, or allow part-time workforce on saturday. All walking routes should be eliminated,unless premium is paid to postal service.Postmasters should have to run two offices, and be more productive. Supervisors should be payed less than craft, since they cant do the work, and would gladly sit at computer and do nothing
this article needs to be corrected to more reflect the truth. the article should
read, ” first-class mail revenue continues to decline due to pat donahoe’s
assinine service cutting policies. postal customers are showing donahoe what
they think of HIS service cutting policy (reforms) by taking their business
elsewhere. this trend will undoubtedly continue into the foreseeable future
until donahoe is replaced with someone who is competent and has some
real-world business experience and understands that you don’t grow any business by screwing over your employees and customers!”