Ongoing postal predicament

Thursday January 24, 2013

The U.S. Postal Service recorded a record $15.9 billion annual loss last year, and officials within the agency are saying that, without congressional action, the agency is likely to run out of money, most likely by October.

Competing Senate and House proposals to help resolve Postal Service finances expired when the old Congress left Jan. 3, according to a recent report by the Pittsburgh Post-Gazette, and two senators who have pushed for a postal overhaul retired.

"We have a just-in-time Congress that waits until the very last minute before doing things, and I think that will be the likely scenario with regard to postal reform," Rob Atkinson, president of the Information Technology and Innovation Foundation, told the Post-Gazette in an interview.

Consider these figures: the latest estimates place losses at about $25 million a day; mail volume is down 26 percent from its peak in 2006; to continue operations, the USPS skipped $11.1 billion of required payments over the past two years for future retirees’ health costs; the agency also exhausted its $15 billion borrowing authority last September.

Postmaster General Patrick Donahoe has over the past few years proposed several scenarios which would make USPS more financially viable: Ending Saturday mail delivery (a move he claimed would save $3.1 billion annually); Closing hundreds of letter-sorting facilities and thousands of post offices; And consider union contracts to fire protected employees. Conversely, a new plan would let the agency set up an independent health plan, more easily raise rates (speaking of: there’s a new hike set to go through Jan. 27), and enter new businesses, such as delivering wine and liquor.

Citizens Against Government Waste has called the USPS business model "increasingly antiquated," which echoes the Government Accountability Office proclamation that "due to USPS’s inability to reduce costs sufficiently in response to continuing mail volume and revenue declines," the current model is simply not viable.

In a 2011 editorial, we called the elimination of Saturday delivery a minor fix, and one which would stretch far beyond carving off a percentage of lost revenue: Cutting Saturday delivery may have little effect in most of the nation’s urban centers, but such a change in smaller, more rural markets could be catastrophic.

While it continues to improve, many Vermonters still live without broadband Internet access. The older generation, which makes up a fair chunk of the state’s demography, still relies on hand-written letters for correspondence. Many small, local businesses still rely on the Postal Service to deliver their bills and payments. Technological advances continue to be made, but we aren’t there yet.

"If Congress fails to act, there could be postal slowdowns or shutdowns that would have catastrophic consequences," Art Sackler, leader of the Coalition for a 21st Century Postal Service, told the Wall Street Journal. Sackler’s group includes some of the country’s largest mailers, including eBay Inc., Time Warner Inc. and FedEx Corp., all of which use the postal service for the final leg of some deliveries.

Even a short shutdown would cost businesses that depend on mailed bill payments, Mr. Sackler told the Wall Street Journal, adding a shutdown could disrupt as many as eight million private-sector workers whose employment is tied to the mail.

Add the Reformer to that list. While our digital offers continue to grow (from our website to our mobile apps to our presence on social media), the daily paper is still a cornerstone to what we do. Elimination of Saturday mail would greatly affect not only us, but most in the newspaper industry.

"While our industry and our company are growing electronic delivery options, and therefore our digital audience is growing, we are still very much in the print and deliver business here in Southern Vermont," Reformer Publisher Ed Woods said of the potential elimination of a USPS delivery day. "Our readers tend to be more mature than the average, making them more comfortable with traditional newspaper products. In addition, our communities are still working to build internet access in an area where coverage is still inconsistent. The need for reliable mail delivery is evident in that our print readership has not declined in recent years, but rather has stayed constant."

The Senate earlier this year passed postal-overhaul legislation, though the postmaster said the bill didn’t go far enough. While that legislation did prevent the USPS from ending Saturday delivery until further study was done, that option certainly isn’t off the table.

Meanwhile, the USPS has begun trimming hours at many rural Post Offices. As announced last week, the Marlboro post office is one of about 13,000 across the country that is going to have its hours cut this year -- by two hours -- along with other Windham County locations in Grafton, Jamaica and Williamsville. East Dover, Wardsboro, Westminster Station, West Dummerston, West Halifax, West Wardsboro and Whitingham daily service will be reduced from eight hours to four. And the Cambrigeport post office will only be open for two hours a day.

"Only 4,000 post offices bring in enough revenue. It’s not a good situation right now," Walter Rowland, Postmaster of the Manchester, N.H., post office, told a group of residents crowded into the Marlboro town office last week. "Nobody wants to do this but we don’t know what else to do." He added that there probably is not very much town residents will be able to do to help the situation.

The USPS hoped to save about $500,000 annually by reducing the hours, which still doesn’t do much to offset the steep losses.

"We have huge financial problems and the trend is clearly downward," Tom Rizzo, the spokesman for the U.S. Postal Service Northern New England District, told the Reformer last week. "It is only going to get worse."

The U.S. Postal Service can generate nearly $35 million in revenues over two years by increasing its viability as a federal contract recipient, according to the USPS’ inspector general’s office, as reported by Government Executive magazine. "The General Services Administration awarded about $340 million annually in 2011 and 2012, but only $1.2 million and $4.8 million to USPS, respectively. Contracts went overwhelmingly to FedEx and UPS."

And as Post & Parcel points out, "For USPS to pull itself out of its current financial difficulties, it cannot just rely on pension and healthcare reforms and high-profile cost-cutting measures ... it must also find fresh ways to raise new revenue streams."

Nips and tucks here and there aren’t going to solve the problem. The USPS needs to take a long, hard look at its own corporate structure before making minor changes that continue to affect many people across the U.S. In addition, we call on Washington lawmakers to enact the changes needed to help USPS. There’s plenty that can be done to shore up losses without affecting service.


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