"Postal service to default on $11.1b bill; Payments meant for retiree benefit" by Hope Yen | Associated Press, July 31, 2012
WASHINGTON — The US Postal Service is bracing for a first-ever default on billions in payments that are due to the Treasury, adding to widening uncertainty about the mail agency’s solvency as fewer and fewer people mail first-class letters and Congress deadlocks on ways to stem the red ink.
With cash running perilously low, two legally required payments for future postal retirees’ health benefits — $5.5 billion due Wednesday and another $5.6 billion due in September — will be left unpaid, the mail agency said Monday. Postal officials said they also are studying whether they may need to delay other obligations. In the coming months, a $1.5 billion payment is due to the Labor Department for workers’ compensation, which for now it expects to make, as well as millions in interest payments to the Treasury.
The defaults won’t stir any kind of catastrophe in day-to-day mail service. Post offices will stay open, mail trucks will run, employees will get paid, and current retirees will get health benefits.
Yup, everything will appear to be normal.
But analysts, labor unions, and business customers are troubled by continuing losses that point to deeper, longer-term financial damage, as the mail agency finds itself increasingly preoccupied with staving off immediate bankruptcy while Congress delays on a postal overhaul bill.
See: Senate Delivers For Post Office
Postmaster General Patrick Donahoe has described a ‘‘crisis of confidence’’ amid the mounting red ink that could lead even once-loyal customers to abandon use of the mail....
So neither rain nor snow nor dark of night could stop him, but....
Jim Husa, 87, of Lawrence, Mich., after stopping to mail letters recently at his local post office, noting the mail agency’s financial woes: ‘‘FedEx and UPS and the Internet seem to be making the Postal Service obsolete.’’
Banks are promoting electronic payments, citing in part the growing uncertainty of postal mail. The federal government will stop mailing paper checks starting next year for millions of people who receive Social Security and other benefits, paying via direct deposit or debit cards instead....
Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, a group representing the private-sector mailing industry, said, ‘‘The impact of the postal default may not be seen by the public, but it will be felt by the business community.’’
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The Postal Service, an independent agency of government, does not receive taxpayer money for operations but it is subject to congressional control. It estimates that it is now losing $25 million a day.
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"Postal Service edges closer to bankruptcy; Cites high cost of health care for future retirees" by Hope Yen | Associated Press, August 10, 2012
WASHINGTON — The nearly bankrupt US Postal Service reported losses on Thursday of $57 million per day in the last quarter and warned it will miss another payment it owes the Treasury, just one week after its first-ever default on a payment for future retiree health benefits.
From April to June, losses totaled $5.2 billion, up $2.1 billion from the same period last year.
The mail agency said it is being hurt significantly by mounting expenses for future retiree health benefits. Those expenses, mandated by Congress in 2006, made up $3.1 billion of the Postal Service’s quarterly loss, while workers’ compensation tacked on another $1.1 billion in expenses. The agency’s operating loss was $1 billion, mostly due to declines in first-class mail.
‘‘We have simply reached the point that we must conserve cash,’’ Thurgood Marshall Jr., chairman of the Postal Service’s board of governors, said in explaining the payment defaults. He cautioned that the agency may delay other payments if necessary.
That reminds me. I have to stop buying a Globe because the part-time shit job just isn't covering expenses anymore.
The Postal Service has been urging Congress for months to pass legislation that would allow it to eliminate Saturday mail delivery and reduce the annual payment of more than $5 billion to the retirees’ health fund. The Postal Service defaulted on that payment last week when the House failed to take action before heading home for a five-week break.
The service says it will miss the second $5.6 billion payment due on Sept. 30, also for future retiree benefits, as cash runs close to zero.
At a news briefing, Postmaster General Patrick Donahoe made clear that day-to-day mail delivery will not be disrupted in any way despite the cash crunch. But Donahoe expressed frustration with the repeated delays by Congress, which he said are contributing to a lot of ‘‘negative talk on finances’’ that could undermine confidence in the agency and its long-term growth. ‘‘Congress needs to act responsibly and move on this legislation,’’ he said. ‘‘This is no way to run any kind of business.’’
Nor is giving them a bailout!
The Senate passed a bill in April that would have provided financial relief in part by reducing annual health payments and providing an $11 billion cash infusion, basically a refund of overpayments the Postal Service made to a federal pension fund.
In other words, this WHOLE CRISIS has been MANUFACTURED to DESTROY one of the FEW GOOD THINGS GOVERNMENT EVER DID!
The House, however, remains stalled over a separate bill that would allow for aggressive cuts, including an immediate end to Saturday delivery. Rural lawmakers in particular worry about the impact of closures in their communities.
The agency originally sought to close low-revenue post offices in rural areas to save money, but after public opposition, it is now moving forward with a new plan to keep 13,000 open with shorter operating hours.
The Postal Service, an independent agency of government, does not receive tax dollars for its day-to-day operations but is subject to congressional control.
Overall, the Postal Service had operating revenue of $15.6 billion from April through June, the third quarter of its 2012 fiscal year. That was down a fraction from the same period last year.
But quarterly expenses this year climbed to $20.8 billion, up 10 percent, largely driven by the health prepayments. The Postal Service is the only government agency required to make such payments.
The Postal Service also has been hurt by declining mail volume as people and businesses continue switching to the Internet in place of letters and paper bills. The number of items mailed during the last quarter was 38.5 billion pieces, a 4 percent decrease, much of it in first-class mail.
On the positive side, the mail agency reported that it continued to lower costs by reducing work hours and boosting employee productivity.
They drove the slaves harder. That's a "positive" to the money media!
The Postal Service’s fast-growing shipping services, which include express and priority mail, had a 9 percent increase in operating revenue to $3.3 billion.
How can they be losing money then?
That strong growth in shipping services helped offset roughly three-fourths of the declines in first-class and advertising mail, said Stephen Masse, the Postal Service’s acting chief financial officer.
The numbers bring the Postal Service’s year-to-date net loss to $11.6 billion, compared with $5.7 billion for the same period last year.
Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, a group representing the private-sector mailing industry, cautioned that the worst of postal losses may be yet to come.
He noted that the service’s third-quarter numbers may reflect an unusually high volume of mail that typically occurs in an election year.
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You wanna put a stamp on that letter?
"Postal Service misjudged ‘Simpsons’" by Angela Greiling Keane | Bloomberg News, August 22, 2012
WASHINGTON — The money-losing Postal Service guessed that the TV cartoon character Homer Simpson and his family were twice as popular as Elvis Presley when it came to sales of commemorative stamps.
As Homer would say, “D’oh!” In a move that wasted $1.2 million in printing costs, the service produced 1 billion of “The Simpsons” stamps but sold just 318 million.
In a report, the Postal Service inspector general singled out the overproduction of stamps marking the 20th anniversary of the cartoon’s run on News Corp.’s Fox network as an example of failing to align stamp production with demand.
“If the Postal Service can’t address a simple matter such as determining how many commemorative stamps to produce, it shows they can’t address the larger problems,” said Tom Schatz, president of Citizens Against Government Waste. “Unfortunately, even a small item can create larger problems.”
Earlier this month, the Postal Service said it posted a loss of $5.2 billion in its third quarter and may lose $15 billion in the year ending Sept. 30. It has asked for Congress’s help in cutting costs by eliminating a requirement to pre-pay for future retirees’ health care and letting it stop Saturday mail delivery.
The service could save $2 million annually by ending overproduction of stamps that end up being destroyed when they don’t sell, the inspector general said.
Mark Saunders, a Postal Service spokesman, declined to comment on the report or why the service produced so many Simpson stamps. “They want the response to the IG to speak for itself,” he said in an interview.
Working from recommendations by a citizens advisory board, the Postal Service produces about 20 commemorative stamp designs each year, featuring historic events, geographic spots, and pop culture icons.
The Simpson stamps sold in 2009 and 2010 for 44 cents, 1 cent less than it costs now to mail a letter.
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Related: First-class stamps to cost 46¢
UPDATE: New postage stamps are apple of Bay State’s eyes
Don't they ever learn?
"Postal Service closes fiscal year with record $15.9b loss" by Ron Nixon | New York Times, November 16, 2012
WASHINGTON — The Postal Service reported a record $15.9 billion net loss Thursday for the fiscal year that ended Sept. 30, bringing the financially troubled agency another step closer to insolvency.
The expected loss, more than triple the service’s loss last year, included accounting expenses of $11.1 billion related to two payments that the agency was supposed to make into a future retiree health benefits fund. But because of revenue losses, the agency was for the first time forced to default on these payments, which were due in August and October.
Nearly $5 billion in other losses were because of a dip in revenue from mailing operations. The agency also reached its $15 billion borrowing limit from the Treasury.
Despite its financial woes, officials said the agency would continue to operate as usual and that employees and suppliers would be paid on time.
The agency had warned that it could face a $100 million cash crunch in October because of a drop in revenue. But it reported more than $500 million in revenue from candidates, political parties, and other interest groups sending out campaign mail before the election. The agency said revenue from political mail and the holiday season should help its cash situation until Congress acts to overhaul the Postal Service.
The agency’s financial reports show that mail volume continues to decline as Americans have increasingly turned to electronic forms of communication....
That's where I get the real news.
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Finally, something in my mailbox!
"Post office tests same-day delivery" by Hope Yen | Associated Press, November 23, 2012
WASHINGTON — Emboldened by rapid growth in e-commerce shipping, the cash-strapped US Postal Service is moving aggressively this holiday season to start a premium service for the Internet shopper seeking the instant gratification of a store purchase: same-day package delivery....
Ever wait in line at a post office?
Who goes to a store these days anyway? From what my morning newspaper tells me the bulk of shopping is shifting online. I guess that's why newspapers are viewed like stores these days.
‘‘There is definitely consumer demand for same-day delivery, at the right price,’’ said Matt Nemer, a senior analyst at Wells Fargo Securities in San Francisco. ‘‘The culture in retail traditionally has been to get a customer into the store, with the immediacy of enjoying a purchase being the main draw. So same-day delivery could be huge for online retailers. The question is whether the economics can work.’’
He and others said that consumers are a fickle lot when it comes to shipping, seeking fast delivery, but also sensitive to its pricing. Many will order online and pick up merchandise at a store if it avoids shipping charges, or will agree to pay a yearly fee of $79 for a service such as Amazon Prime to get unlimited, free two-day delivery or even buy a higher-priced item if it comes with ‘‘free’’ shipping.
‘‘Customers do like same-day delivery when it gets very close to a holiday or it otherwise becomes too late to shop,’’ said Jim Corridore, analyst with S&P Capital IQ, which tracks the shipping industry. ‘‘But while the Postal Service has the ability to deliver to any address, they are not always known for their speed. To increase their speed might prove to be a much more complex offering than they’re thinking about.’’
Someone is actually thinking over there?
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Need I even comment?
