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Thread: Postal Service on path to be broke by October

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    Re: Postal Service on path to be broke by October

    Jesus people have no idea what they're talking about. Inefficient government, eh?
    For decades the postal service has offered a service where they take a letter, put it on a plane, fly it across the country and then deliver it by hand for less than a dollar, and they've been self-sufficient doing it. What's FedEx's price for doing the same, hmm?

    It wasn't until very recently that they started to run in the red. A combination of economic downturn and the fact that nobody is sending letters anymore means their revenue is dropping. They'll need some restructuring.

    Find me one private entity that has been able to do what the USPS does, on that scale, more efficiently.
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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by rathi View Post
    The post office was pretty decently run iirc, it was actually profitable until a few years ago. I don't mind phasing it out in the modern era, but whatever replaces it needs to insure access to all Americans as public infrastructure. E-mail doesn't cut it alone, as it can't deliver small items like credits cards, not is it available to 100% of people.
    That's essentially what we have with the post office. If you need to ensure access to all americans as a public infrastructure, you're talking government at that point. I don't get the big deal with the post office. So it's not turning a profit, oh well. The private companies can probably do a very good job. But there's no gaurantee with private companies that they're going to be there in the future. The government will be there, and thus it's best to use it for cases such as this. The Post Office doesn't need to turn a profit, it needs to exist.
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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by Erod View Post
    Or....they would have lowered prices to increase volume, cut back on staff, invented a better sorting method, and incentivized their employees with productivity bonus structures.
    They tried some of those things. specifically lowering prices and inventing better sorting methods. They went bankrupt.

    Also, when there is no competition and volume is already very high, lowering prices isn't a good idea.

    Supply and demand.

    There has always been a much higher demand for the service than there has been suppliers of that service, especially at the price. Mail-based adertising is the vast majority of what the Post office deals with. It is going broke because it subsidize these companies advertising budgets by losing money while prviding htem this service. That's piss poor business. Lowering prices and further subsidizing their advertising is just astronomically stupid.
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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by Erod View Post
    How many letters can a mailman deliver in an hour?

    Let's see. If he went to 50 houses in an hour and delivered 5 letters per house (including paid-for junk mail), that's $125 of mail in an hour. For the day, that's $1,000. How much does the mailman make? What did it cost to transport and sort it?

    Again, find efficiencies.
    50 houses in an hour? Almost a house a minute? Those houses must be right on top of each other.
    Last edited by USA_1; 03-03-11 at 02:18 PM.
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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by USA_1 View Post
    50 houses in an hour? Alnost a house a minute? Those houses must be right on top of each other.
    Sometimes it's an apartment community, where you have 300 mailboxes within 10 feet of each other.

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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by buck View Post
    Just do a search for postal service rate increase rejected. It happened like a year ago.
    here is the article that came right up when I did as you suggested

    Postal Rate Hikes Rejected By PRC

    By Mark Hrywna

    The Postal Regulatory Commission (PRC) has rejected the United States Postal Service’s (USPS) request for an average 5.6-percent rate hike next year. It’s the first time PRC ruled on an exigent rate case under the Postal Accountability and Enhancement Act of 2006 (PAEA) and the decision by the five-member panel was unanimous.

    While conceding that postal volume and revenue have declined dramatically in recent years, the PRC said the Postal Service’s cash flow problem “would have occurred whether the recession took place or not,” and the exigent rate case adjustments “represent an attempt to address long-term structural problems not caused by the recent recession,” PRC Chairman Ruth Goldway said in a statement.

    “The commission finds that the Postal Service has shown the recent recession to be an exigent circumstance but it has failed both to quantify the impact of the recession on its finances and to who how its rate request relates to the resulting loss of mail volume,” Goldway said. The PRC’s analysis indicates that as the recession fades, mail volume appears to be rebounding.

    “This is the biggest victory for mailers…in a long, long time. I can’t remember anything bigger than this,” said Tony Conway, executive director of the Washington, D.C.-based Association of Nonprofit Mailers, and a spokesman for the Affordable Mail Alliance. “It’s a hard-fought victory. I never expected it to be honest when we started but we’ve come a long way in a short period of time,” he said.

    The Affordable Mail Alliance, a coalition of more than 1,200 nonprofits, trade associations, consumer groups and businesses large and small, was formed after the USPS filed its rate case in July. The alliance said the decision will benefit the Postal Service in the long run and is good for businesses. “The PRC today has helped countless businesses stay competitive and saved tens of thousands of jobs,” said Conway.

    In response to dwindling mail volume and annual budget shortfalls in the billions of dollars, USPS reduced costs by more than $6 billion last year. The Postal Service, which ended its third quarter in June with a net loss of $3.5 billion compared with $2.4 billion the same quarter in 2009, argued in its filing that the primary cause of its liquidity crisis was “structural and related to an overly ambitious requirement to prefund its future retiree health benefit premiums.”

    Analysis by the PRC, however, confirmed that the cash flow problem instead was a result of “other, unrelated structural problems and the rate adjustments would neither solve nor delay those problems.” Even with the requested increase, the Postal Service would be unable to meet its annual obligation of roughly $5.5 billion in 2011 and succeeding years of a 10-year payment schedule. “It has been unable to fund this obligation from operations, and has instead used up all of its retained earnings and drawn down from its $15-billion borrowing authority,” the PRC said.

    In a statement released hours after the PRC’s decision, Postmaster General John Potter expressed disappointment in the decision but was encouraged by the “acknowledgement and understanding of the larger financial risk we face through the mandated prefunding of retiree health benefits.”

    The USPS now must decide whether to appeal the decision to the courts, whether to re-file another exigent rate hike request, or file a regulate rate increase that falls within the CPI, which has been creeping up toward 2 percent this year. The Postal Service will review the ruling to “make an informed decision about what options we have and what may be the best course for our customers, our employees, our stakeholders and the American public,” Potter said.

    “Clearly, the Postal Service is a viable business,” he said. “Maintaining that status requires elimination of several legislatively-imposed constraints that hamper our ability to operate efficiently and profitably,” said, outlining six specific things USPS should be allowed to do (and which legislation in Congress has been introduced to address):

    •Alter frequency of delivery consistent with the use of mail
    •Close unprofitable post offices
    •Restructure obligation to prefund retiree health benefits
    •Create and offer products and services beyond mail
    •Assure that arbitrators consider the financial health of the USPS when agreement can’t be reached with labor unions
    •Resolve overfunding of pension systems.
    Goldway said commissioners were aware since USPS announced its intention to file the case in March that the process was unprecedented and whatever decision made would be controversial. The Postal Service filed the case in July and the PRC expedited a 90-day review process.

    PAEA allowed USPS to request rate increases above the rate of inflation, which last year was less then 1 percent, if it can show it is “due to extraordinary or exceptional circumstances; it’s reasonable, equitable and necessary under best practices of honest, efficient and economical management; and, it’s necessary to maintain and continue of postal services of the kind and quality adapted to the needs of the United States.”

    So there is material in there to support your contention that increased revenue all by itself will not solve their problem.
    Last edited by haymarket; 03-03-11 at 02:22 PM.
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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by USA_1 View Post
    No private company could deliver a letter to every address in the country for 50 cents. In order for Americans to have that luxury the postal service has to be subsidized. It was never meant to be a for profit company. How much profit does our military generate? NASA?
    Are you sure? We'll never know, will we?

    If an entity (public or private) got 50 cents for every piece of crap it puts in our mailboxes, they'd make a fortune. UPS already has suburban routes. If they could, I'm pretty sure they'd be in the business.
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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by Erod View Post
    Sometimes it's an apartment community, where you have 300 mailboxes within 10 feet of each other.
    The post office would make a fortune in your world.
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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by MaggieD View Post
    Are you sure? We'll never know, will we?

    If an entity (public or private) got 50 cents for every piece of crap it puts in our mailboxes, they'd make a fortune. UPS already has suburban routes. If they could, I'm pretty sure they'd be in the business.
    UPS charges a lot more than USPS. Putting the crap in the mailbox is a small part of it. The UPS here drops their small packages off at the post office and lets the mailmen deliver them. I wonder why?

    Do you think UPS could make money delivering a letter from New York to LA charging 50 cents? Private companies eliminate routes and services that aren't profiable. They set their rates to create a profit. The USPS makes money on packages but loses it on letters.
    Privatizing the post office could be a national disaster that the government might have to bailout.
    DHL stopped delivering in this country because they couldn't make money.
    Last edited by USA_1; 03-03-11 at 02:33 PM.
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    Re: Postal Service on path to be broke by October

    Quote Originally Posted by USA_1 View Post
    UPS charges a lot more than USPS. Putting the crap in the mailbox is a small part of it. The UPS here drops their small packages off at the post office and lets the mailmen deliver them. I wonder why?

    Do you think UPS could make money delivering a letter from New York to LA charging 50 cents? Private companies eliminate routes and services that aren't profiable. They set their rates to create a profit. The USPS makes money on packages but loses it on letters.
    Again, we'll never know. The USPS is a monopoly. If what you're saying is true, why is it protected from competition?

    Further, if the USPS makes money on pakges but loses it on letter, why in the hell aren't they charging more for letters?? And junk mail that probably mails for 7-cents or less apiece.
    Last edited by MaggieD; 03-03-11 at 02:35 PM.
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