Where is the USPS headed & how will it affect your mail center?.
The USPS says it may no longer be able to provide delivery six days a week to every location-that is, if nothing else changes. Instead, it is ending new construction, leasing, and other projects for certain facilities and is considering eliminating Saturday mail service and closing post offices. And despite the rate increase that took affect earlier this year, postage may be rising again soon, as the postal service considers filing another rate hike request, possibly as early as June. These announcements follow the news that the USPS is running at a loss this year. Is this for real, or a ploy for attention? And how will all of this affect your mail center? The answer is in any number of ways. For mailers that work with facilities that may be closed, it means that the USPS officials you have come to know and deal with regularly will no longer be there. Instead, you may have to communicate with a mailing facility much farther away—and begin the getting-to-know-you process all over again. The biggest adjustment in the near future would be yet another rate hike; many mailers are still trying to deal with this year’s change. The USPS may file for a 10% to 15% rate hike as early as this June or July, to take affect later next year. The first-class stamp, according to some accounts, may rise anywhere between $0.03 and $0.05. The postal service, however, says “there is nothing official yet.” To add to everything else, Postmaster General William Henderson will step down this month. Word From the USPS The USPS blames its current economic shortfalls on a number of factors, ranging from a large workforce to poor weather and of course, rising fuel prices, which have hit a number of different companies hard. Other reasons for its financial woes include wage increases higher than the rate of inflation, more competition, and electronic alternatives such as e-mail and the Internet. The USPS chief financial officer, Richard Strasser announced that for accounting period seven (AP7), the Postal Service’s net loss was $39 million.
Year-to-date, the net loss was $291 million compared to a planning income of $291 million, a variance of $582 million. In addition, the postal service’s total factor productivity (1.4%) was below plan (1.5%). He reported that the Postal Service was down some 19,000 employees even though the USPS has “increased deliveries.” For fiscal year 2001, the revised deficit is now $2.1 billion to $3.1 billion (see table). USPS’s Financial Outlook for FY2001 Budgeted Current Reported net income:
quarters 1 and 2 $200 M -$260 M
Originally budgeted net
income: quarters 3 and 4 -680 M -680 M
Expense adjustments to
net income: quarters 3 and 4 -320 M
Revenue adjustments to
net income: quarters 3 and 4 -500 M
Subtotal -1.8B
Other revenue adjustments to
net income: soft economy-
quarters 3 and 4 -300 M to -1.3 B Net
· 480 M -2.1 to -3.1 B FY 2001 revised deficit $2.1 to 3.1 B
(Source: GAO based on USPS Estimates) To tr y and remedy the situation, the postal service announced a second round of budget cuts. It plans to cut 75,000 work years, cut administrative costs by 25%, and reduce transportation costs by 10%. Some critics contend that these cuts can be made simply through employee attrition, and that more needs to be done to cut excesses and inefficiency. The reactions to these announcements were strong and plentiful. From mailing professionals, associations, politicians, and newspaper editorials, most agreed that the postal service should not cut back to five-day-a-week deliveries, and that some type of reform is needed. For example, in response to halting construction on new postal facilities, Senators Strom Thurmond, Ernest Hollings, and Floyd Spence sent a letter to PMG Henderson stating that it is an “ill-advised decisi
