The past few years have been tumultuous for the U.S. Postal Service. Mail volume has dropped 20 percent to 171 billion pieces from its peak in 2006, and over the last four years experienced unprecedented financial losses totaling $20 billion. In 2010 alone, the Postal Service experienced its largest 1-year net loss of $8.5 billion.
Our Risk Analysis Research Center has published The Cost Structure of the Postal Service: Facts, Trends, and Policy Implications, which reviews the major components of the Postal Service’s 2010 cost structure and presents insights to the ongoing policy debate about the future of the Postal Service. Below are some of the paper’s key findings:
1. The mail business is labor intensive, and labor makes up 80 percent of Postal Service expenses. This means that in order to achieve real cost savings, the Postal Service has to cut labor costs. While ideally labor costs could be cut to match declines in volume, this is challenging because the Postal Service’s delivery network has significant fixed costs.
2. Since 1972, the total cost of benefits to the Postal Service has risen an astounding 448 percent above inflation, while the real amount spent on wages has declined by nearly 3 percent. This extraordinary increase in benefit costs is due to three factors: a general trend of higher benefit costs that has affected most U.S. companies, the gradual transfer of postal retiree benefit costs from the federal government to the Postal Service, and repeated overcharges for these retiree benefit costs.
Loading ...3. Since 2000, cumulative unit costs for three of the four market dominant mail classes (Periodicals, Standard Mail, and Package Services) have far outpaced increases in the Consumer Price Index (CPI-U).
4. A continuing freeze in capital investment, while saving the Postal Service in the short term, may paradoxically lead to higher costs in the future. In particular, investing in rightsizing the physical network to meet decreasing demand is vital to the future viability of the Postal Service.
We invite you to review the white paper and share your thoughts on reducing costs and the impact those cost reductions might have on the Postal Service here on our blog.
This blog is hosted by the OIG’s Risk Analysis Research Center.
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HAVE PARTNERING WITH HOMELAND SECURITY, STATE/LOCAL POLICE, HOME SECURITY COMPANIES, OR EVEN GOOLE EARTH’S “STREET VIEW”. TO SUPPLY VIDEO SERVICES FROM YOUR DELIVERY VEHICLES.
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Sorry for the re-post.
I heard a person on the ed schultz radio show on tue the 9th. I did not catch his name. It had to do with the Wi. unions. What is his name? He said that the USPS makes money, but 75 years advanced pension funding was the drain on the USPS. Also any line budgets that bring in more money get doled out to other agencies and not to USPS. This is very interesting to me. I am a conservative and believe the USPS should not be privatized and stay with in the Gov. Can anybody help me. Thanks
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I don’t see the logic why the management controlling the hours of part time clerk, mail handler & even the TE’s. They only work less than 36 hours. But carrier can have overtime just to do the job of clerk & mail handler. Management do some math please!!!
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In My town there are 2 small villages, and therefore 2 postoffices, that are a mile apart, couldn’t those be combined for some savings? Sandy Creek and Lacona,NY villages.
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I suggest expanding the USPS services to avoid thousands of postal workers lay-offs. For instance, distributing fresh produce from local farmers directly to their communities, delivering dairy products or meat to customers from dairy & meat producers, in other words, becoming the logistics company of any small enterprise or local manufacturing outfit, etc. Nowadays there is a new global commerce trend paradigm where people are buying retail directly from small manufacturers located in South East Asia, bypassing large corporations such as Walmart. I wonder if the same operations can be implemented locally but for farmers, ranchers and small manufacturing companies using the USPS as their main logistics supplier. The USPS has a huge infrastructure capable of delivering millions of goods efficiently to customers, which at the present time is being underutilized.
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by reinventing ourselves into serving the new market demands for delivery services to continue to be the World’s First Class Postal Service, rather than the best and most efficient buggy whip company.
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Maybe the post office should WAKE up and find out why Fed Ex and UPS have been so successful in the few short years that they have come along and taken the bulk of the profitable business away from the USPO. I can help you with an answer. BETTER service and better people. Their rates are higher than USPO but we don’t mind paying for BETTER service. Years ago I worked Chicago and had to ship and receive packages via the postal service. Every nite I went to the O’Hare PO to pick up the days packages. The men working there were the WORST people I have ever dealt with in my entire life. After that I switched to UPS and later used Fed Ex. Is ANYONE awake at the POST OFFICE?????
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Do you think anyone at the post office will read my last message??? I doubt it! Thats the reason that they have such BIG problems. Its funny how organizations that have a monopoly don’t change till its TOO LATE. All they had left was First Class mail and now ..here we are on E-mail. 80% of their income goes for wages! And I bet that most of them are retired. Wake up America!
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Nice try on that one. Did you know that the Post Office delivers parcels given to them by UPS and Fedex, to deliver to residences. WHY? The Post Office delivers packages to homes better and cheaper than Fedex and UPS. That’s why they contract with us-we do it better, and at a lower cost. Better do your homework next time
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I think we just need to stop cutting the cost of labor. We’re going to end up like china where labor is virtually worthless. People need to get paid and feed their families. What we need to do is stop using china so much for our labor. They wonder why no one can find a job these days, well I think it’s because we are giving all our labor to china because it’s so cheap for businesses to use that but they don’t realize we are destroying our country by doing so. They say only a little bit of money and labor is giving to china but it’s all lies and inaccurate results so nobody looks bad. Every thing is made in china these days when it could be made here.
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Other- we had an operating profit of $800 million dollars over the last 4 years. We had to pay $5.5 billion dollars per year to an already overfunded Retiree Health Care trust for the last 4 years. Name ONE BUSINESS in the US that does that. COngress did this to us in 2006. Our “loss” in the last 4 years was $20 billion dollars- exaclty the amount of the pre-funding. We don’t have a financial problem- we have a Congress problem. We were supposed to pay, according to the GAO, $800 million per year for 75 years, until the uneducated lawyers of Congress stuck their noses where they don’t belong.
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Couldn’t an amazing amount of money be raised by selling advertising on stamps?
If done right they could retain the collectible factor.
I would think Starbucks, Target, Campbell Soup etc. would love it!
Just a thought.
Lash
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Most commentary on the Post Office’s financial situation misses the big point. I’m just a consumer but it’s clear that stamp prices have not kept up with inflation and that reduced mail volume affects revenue. The privatization forces offer a disastrous alternative. See http://nogginstrain.blogspot.com/2011/09/that-terrible-inefficient-boondoggle.html
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Just like any private business if are in the red you need to cut costs and make up revenue. One way is to raise prices and have fundraisers.
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I don’t think many people would complain if the postal service didn’t deliver mail monday through friday. (if its in a residential area) Especially on Fridays. It may be an issue of “beefing up” accounting and business practices.
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