U.S. Postal Service Q2 loss widens to $1.3 billion, while revenue rises

[mn78psu83]

LINK

Megan Brennan sums it up nicely concerning the "legislatively mandated business model." Man is this thing broken. This might end up test board material. I was thinking more in terms of business though. Don't see how government can solve this one.

The U.S. Postal Service reported Friday a second-quarter net loss that widened to $1.34 billion from $562 million a year ago. The controllable loss, which excludes items that are non-recurring and outside of management control, was $656 million vs. a profit of $12 million a year ago. The controllable loss was due primarily by a $236 million increase in retiree health benefit costs, a $364 million rise in compensation expenses and a $155 million increase in transportation expenses. Revenue rose 1.4% to $17.50 billion, as a 9.5% rise in shipping and packages revenue helped offset a 2.5% decline in first-class mail revenue. "Despite growth in our package business, our financial results reflect systemic trends in the marketplace and the effects of an inflexible, legislatively mandated business model that limits our ability to generate sufficient revenue and imposes costs upon us that we cannot afford," said Postmaster General Megan Brennan.

 

[Obliviax]

USPS has a real dilemma. Lots of people in rural areas really count on the USPS. That is opposed to a FedEx, who can pick and choose their profitable businesses. Plus, older people still like getting that paper statement, check or invoice. These are all ancient but hey, people (industries) still use FAX machines (realtors, medical, legal).

 

[91Joe95]

I can't believe politicians and government beaurocrats can't fix a simple problem. Maybe they should stick to complex problems.

 

[LionDeNittany]

LINK

Megan Brennan sums it up nicely concerning the "legislatively mandated business model." Man is this thing broken. This might end up test board material. I was thinking more in terms of business though. Don't see how government can solve this one.

The U.S. Postal Service reported Friday a second-quarter net loss that widened to $1.34 billion from $562 million a year ago. The controllable loss, which excludes items that are non-recurring and outside of management control, was $656 million vs. a profit of $12 million a year ago. The controllable loss was due primarily by a $236 million increase in retiree health benefit costs, a $364 million rise in compensation expenses and a $155 million increase in transportation expenses. Revenue rose 1.4% to $17.50 billion, as a 9.5% rise in shipping and packages revenue helped offset a 2.5% decline in first-class mail revenue. "Despite growth in our package business, our financial results reflect systemic trends in the marketplace and the effects of an inflexible, legislatively mandated business model that limits our ability to generate sufficient revenue and imposes costs upon us that we cannot afford," said Postmaster General Megan Brennan.

Ever try to mail something at the post office? The post office is a freaking disaster. I live right by a giant post office, always long lines, always someone using the machine spending 10 minutes on something that takes 30 seconds.

There are many simple fixes, but the post office won't do it. Inefficiency is their efficiency.

LdN

 

[bison13]

USPS has a real dilemma. Lots of people in rural areas really count on the USPS. That is opposed to a FedEx, who can pick and choose their profitable businesses. Plus, older people still like getting that paper statement, check or invoice. These are all ancient but hey, people (industries) still use FAX machines (realtors, medical, legal).

Agree but I dont want my grandmother (88 yo) to do everything online either. There has to be a way to control the losses and I'd start with the retirement and health benefits.

 

[anon_xdc8rmuek44eq]

Ever try to mail something at the post office? The post office is a freaking disaster. I live right by a giant post office, always long lines, always someone using the machine spending 10 minutes on something that takes 30 seconds.

There are many simple fixes, but the post office won't do it. Inefficiency is their efficiency.

LdN

Agree. You would think this is the perfect opportunity to make mass use of 'self serve' stations, but mail is super complicated to mail if it can't be mailed with one stamp - what size is the box/envelope? How much does it weigh? Where is it going? How fast do you want it to get there? Do you want insurance? Return receipt? Delivery confirmation?

 

[Obliviax]

Agree but I dont want my grandmother (88 yo) to do everything online either. There has to be a way to control the losses and I'd start with the retirement and health benefits.

right....interestingly, I had three colleagues relay similar stories:

new graduate told to write thank you notes. After given instructions, the kids had no idea what a "stamp" was, where you got them and the purpose. After detailed instructions, had no idea what to do with the note: written, stamped and sealed. They didn't know you could actually mail stuff with your mailbox, they thought you just got stuff.

 

[LionDeNittany]

Agree. You would think this is the perfect opportunity to make mass use of 'self serve' stations, but mail is super complicated to mail if it can't be mailed with one stamp - what size is the box/envelope? How much does it weigh? Where is it going? How fast do you want it to get there? Do you want insurance? Return receipt? Delivery confirmation?

Yeah, I agree. This is why an app would solve about 99% of the issues involved with the mail service.

All of those questions can be answered. The app gives you a four word code (apples joker wheel autum) you write it on the package and drop it off.

Their machine scans for the words, and applies the correct label for their systems. Address etc.

Voila.

 

[interrobang]

Revenue is only rising because of Amazon.

 

[Obliviax]

Yeah, I agree. This is why an app would solve about 99% of the issues involved with the mail service.

All of those questions can be answered. The app gives you a four word code (apples joker wheel autum) you write it on the package and drop it off.

Their machine scans for the words, and applies the correct label for their systems. Address etc.

Voila.

Agree, but They've had something like this for some time. prints off a bar code. Problem is, many in their market have no idea how to use an app or even a computer printer. And, how do you weight the darned thing?

 

[bison13]

My two and a half year old knows what a stamp is, how the hell do graduates not know?

 

[interrobang]

Agree. You would think this is the perfect opportunity to make mass use of 'self serve' stations, but mail is super complicated to mail if it can't be mailed with one stamp - what size is the box/envelope? How much does it weigh? Where is it going? How fast do you want it to get there? Do you want insurance? Return receipt? Delivery confirmation?

Don't the machines do that already? It's the same questions that the person at the counter is going to ask.

 

[anon_xdc8rmuek44eq]

Don't the machines do that already? It's the same questions that the person at the counter is going to ask.

Well, they do, but that can be overwhelming for a lot of people. At least at the counter, there is someone to answer your questions - like, what is the difference between return receipt vs. certified mail, or what is the difference between priority vs. first class vs. priority mail express? They can also instantly tell you the cost differences which is a determining factor for many. Kiosks should be simple - I can use them just fine, a lot of folks can't.

 

[LionDeNittany]

Agree, but They've had something like this for some time. prints off a bar code. Problem is, many in their market have no idea how to use an app or even a computer printer. And, how do you weight the darned thing?

It is weighed after. But having a scale in the building... pretty simple.

With an app, like other systems, you get billed once the package is accepted. This is a pretty standard way of doing business today.

FedEx has done business this way for... 30 years?

What the post office needs to do, like the banks, is get the tech savvy customers out of their lines. Then they can use the counter for the people who need it.

https://map.what3words.com/capsize.queried.determiners

LdN

 

[Obliviax]

It is weighed after. But having a scale in the building... pretty simple.

FedEx has done business this way for... 30 years?

LdN

Agree...but was refering to individuals sending packages. Also, FedEx is a different target market. USPS isn't in the biz to make a profit but to serve. If you are 80 and like sending quilts and scrap books to your grandchildren, you aren't going to print a bar code off of your iPhone app. And being on a fixed income, want to know the cost before sending. And those people, at least today, can't exist without USPS (for bills and checks).

 

[LionDeNittany]

Agree...but was refering to individuals sending packages. Also, FedEx is a different target market. USPS isn't in the biz to make a profit but to serve. If you are 80 and like sending quilts and scrap books to your grandchildren, you aren't going to print a bar code off of your iPhone app. And those people, at least today, can't exist without USPS (for bills and checks).

Yes, I edited my post. I was more thorough after the edit.

They have the same problem Whole Foods had in the end. I'm in there trying to buy $90 worth of filet mignon and I'm stuck behind a woman with 6 grapefruit and 6 bags trying to save a nickel on each grapefruit by bringing her own bag.

LdN

 

[Obliviax]

Yes, I edited my post. I was more thorough after the edit.

They have the same problem Whole Foods had in the end. I'm in there trying to buy $90 worth of filet mignon and I'm stuck behind a woman with 6 grapefruit and 6 bags trying to save a nickel on each grapefruit by bringing her own bag.

LdN

Exactly. My company builds apps and can't believe the stuff we see. In my later years, in business, see that "scaling" is a massive challenge, especially in retail. Being a govt entity versus a private sector entity is also a problem. FedEx and UPS go in and pick off the profitable parts of the industry while USPS is stuck with the crap. I don't know what the answer is....time will tell.

 

[BobPSU92]

Does Penn State run the USPS?

 

[The Spin Meister]

90% of what comes in snail mail is junk that doesn't even get opened. USPS should go to every-other-day delivery. Some people get their mail on M-W-F, the others get it T-T-S. Won't really matter as snail mail is never used for time-sensitive stuff.

This way, the could cut the delivery trucks in half, the carriers in half, cut fuel nearly in half, cut management substantially, mechanics and repair costs in half....along with all those benefits....insurance, retirement, vacations, sick leave, holidays, worker's comp, SS matches.

What say you?

 

[MtNittany]

What say you?

Doesn't matter what I say. What do you think the AFL-CIO/NALC would say?

 

[Fac]

Here in Louisiana we get our garbage picked up twice a week so why can't a postal worker ride with them and deliver mail. Less trucks on road less gas and the passenger seat is unused on a garbage truck anyways. Twice a week is good enough for me.

 

[mn78psu83]

Doesn't matter what I say. What do you think the AFL-CIO/NALC would say?

Good point. Speaking of which:

LINK: NALC Pres. Frederic Rolando - Clarifying misinformation about USPS

One point is salient and constantly cited. Brennan alluded to it too. Rolando cites it at the end of the article.

So if USPS takes in more money than it spends on normal business expenses, why is there red ink? The answer has little to do with postal matters and everything to do with flawed public policy. In 2006, Congress mandated that USPS do something no other U.S. entity, public or private, is required to do: pre-fund future retiree health benefits decades into the future. That $5.8 billion annual charge accounts for almost all postal “losses.”

 

[ThePennsyOracle]

Serious question:

Why can't the USPS put grocery store-style self-checkouts along with a drop box in malls, WalMarts, neighborhoods....wherever....to capture more business?

 

[PS4814]

Good point. Speaking of which:

LINK: NALC Pres. Frederic Rolando - Clarifying misinformation about USPS

One point is salient and constantly cited. Brennan alluded to it too. Rolando cites it at the end of the article.

So if USPS takes in more money than it spends on normal business expenses, why is there red ink? The answer has little to do with postal matters and everything to do with flawed public policy. In 2006, Congress mandated that USPS do something no other U.S. entity, public or private, is required to do: pre-fund future retiree health benefits decades into the future. That $5.8 billion annual charge accounts for almost all postal “losses.”

Thank you for sharing this and was hoping someone else would bring this up. Everyone can bring up issues of electronic mailings and private business but this mandate by congress is the largest contributor to the current financial losses the USPS is incurring. The agency is saddled with a congressional mandate that requires it to prefund more than $5.5 billion annually for health benefits for future retirees. This chart illustrates the effect that mandate has had since 2006.

 

[ClarkstonMark]

Revenue is only rising because of Amazon.

yes, and the same reason is behind losses rising

 

[ClarkstonMark]

Serious question:

Why can't the USPS put grocery store-style self-checkouts along with a drop box in malls, WalMarts, neighborhoods....wherever....to capture more business?

when was the last time you were in a post office?
the machines are already there (at least in mine), just need 5-10 (for my location) vs the current 1

 

[ThePennsyOracle]

when was the last time you were in a post office?
the machines are already there (at least in mine), just need 5-10 (for my location) vs the current 1

I'm not talking about going to the post office to use said machine.

 

[NJPSU]

We spend $700 billion on defense a year but the problem is the post office loses $5 billion?

 

[step.eng69]

pre-fund future retiree health benefits decades into the future.

his chart illustrates the effect that mandate has had since 2006.

Good information fellows, the chart is eyeopening

 

[The Spin Meister]

Doesn't matter what I say. What do you think the AFL-CIO/NALC would say?

--
They could offer a very generous early retirement/buyout with the huge savings the staggered delivery service would generate. It would even be a huge reduction in the pensions that others have posted about.

And since very, very few government union members voted for Trump or any Tea Party Congressmen, they could pass it without worrying about voter loss.

 

[BVSt.Paul]

Thank you for sharing this and was hoping someone else would bring this up. Everyone can bring up issues of electronic mailings and private business but this mandate by congress is the largest contributor to the current financial losses the USPS is incurring. The agency is saddled with a congressional mandate that requires it to prefund more than $5.5 billion annually for health benefits for future retirees. This chart illustrates the effect that mandate has had since 2006.

Exactly. Reduce the craziness of this mandate and USPS will at least break even.

 

[MtNittany]

Exactly. Reduce the craziness of this mandate and USPS will at least break even.

Either that, or force the same conditions on every other money losing gubbmint agency. Naah. Can't have that...

 

[PS4814]

Couple of additional pieces of info from an article few years back

https://www.nytimes.com/roomfordeba...the-us-postal-service-is-crippled-by-congress

"The widely reported narrative that the Postal Service is on the brink because it’s outmoded, or because of Internet competition, is not sustained by the facts. Want proof? Over the four fiscal years from 2007 to 2010, the Postal Service made a net operational profit delivering the mail of $611 million – remarkable during the worst recession in 80 years."

"In 2007, a Congressional mandate that the Postal Service prefund future retiree health benefits for the next 75 years and do so within a decade -- something no other public agency or private company has to do -- was implemented, and it’s cost the agency $21 billion since then. That alone accounts for 84 percent of the Postal Service’s red ink."..."If Congress will fix the mess it created, then the postal community can take a deep breath, roll its sleeves up and do what it always has done: modernize, adapt and better serve America."

 

[Meteor-Lion]

LINK

Megan Brennan sums it up nicely concerning the "legislatively mandated business model." Man is this thing broken. This might end up test board material. I was thinking more in terms of business though. Don't see how government can solve this one.

The U.S. Postal Service reported Friday a second-quarter net loss that widened to $1.34 billion from $562 million a year ago. The controllable loss, which excludes items that are non-recurring and outside of management control, was $656 million vs. a profit of $12 million a year ago. The controllable loss was due primarily by a $236 million increase in retiree health benefit costs, a $364 million rise in compensation expenses and a $155 million increase in transportation expenses. Revenue rose 1.4% to $17.50 billion, as a 9.5% rise in shipping and packages revenue helped offset a 2.5% decline in first-class mail revenue. "Despite growth in our package business, our financial results reflect systemic trends in the marketplace and the effects of an inflexible, legislatively mandated business model that limits our ability to generate sufficient revenue and imposes costs upon us that we cannot afford," said Postmaster General Megan Brennan.

Do away with Saturday mail and consider making the postal employees pay as much for their health care that the other federal employees pay.

 

[PS4814]

Either that, or force the same conditions on every other money losing gubbmint agency. Naah. Can't have that...

Force the same conditions? If they did that - instead of making them prefund retiree benefits for 75 years something no other branch of gov't has to do - they wouldn't be losing money in the first place. Congress forced them in the hole and you want congress to cut their funding further - good luck with that logic. An an aside the mandate in 2006 was pushed by politicians that were in bed with UPS and FedEx.

 

[MtNittany]

Force the same conditions? If they did that - instead of making them prefund retiree benefits for 75 years something no other branch of gov't has to do - they wouldn't be losing money in the first place. Congress forced them in the hole and you want congress to cut their funding further - good luck with that logic. An an aside the mandate in 2006 was pushed by politicians that were in bed with UPS and FedEx.

So including unfunded pensions, etc. in an annual budget is a bad thing?

 

[anon_xdc8rmuek44eq]

We spend $700 billion on defense a year but the problem is the post office loses $5 billion?

Preach. Although I wasn't complaining in Sarajevo when KBR was stocking the dining hall with steak and fresh seafood every day....

 

[91Joe95]

Force the same conditions? If they did that - instead of making them prefund retiree benefits for 75 years something no other branch of gov't has to do - they wouldn't be losing money in the first place. Congress forced them in the hole and you want congress to cut their funding further - good luck with that logic. An an aside the mandate in 2006 was pushed by politicians that were in bed with UPS and FedEx.

Wait. Hold on. Politicians cannot be the problem. They only offer solutions.

 

[tboyer]

Post Offices are kind of like a time machine. We have one near us that is like going back to 1943.

You go in to this big lobby that is bare except for a small window with bars and a black button. You press the button, which rings a bell and wakes somebody up. It takes a little while, but eventually a guy shows up and asks your address (tracking number means nothing). Then he disappears into the darkness of the building for about 5 minutes, roots around on some shelves, and usually finds the package.

You feel like you're in a TV re-run from the days of black and white. Or maybe "Brazil" -- it's kind of like that same eerie retro feeling. There's almost nothing like it these days.

I think the Post Office is worth preserving as a kind of a museum. So it loses $4 billion a year, who cares. Our government is running $1.5 trillion in deficits, adding $4 billion a year just means the country will be bankrupt 10 minutes earlier than it would be otherwise.

Plus, it's a way for elderly people to send birthday cards, pay bills and buy money orders.

 

[BVSt.Paul]

So including unfunded pensions, etc. in an annual budget is a bad thing?

I hope we can all agree that funding expenses 75 years in the future in a 10 year span is a bit excessive. It’s putting away money for people it hasn’t even hired yet.