U.S. Postal Service Losses TRIPLE!
The United States Postal Service is struggling to maintain its services.
The USPS reported tripled losses in the 2012 fiscal year, which ended September 30, losing $15.9 billion compared to last year's $5.1 billion.
Competition from private groups has hurt the Postal Service in recent years. The group also cited issues with retirement benefit funding as one of the main contributions to its losses.
It was able to stay ahead of competitors like FedEx and UPS in parcel delivery, bringing in $11.5 billion in revenue – 8.7 percent higher. But mail volume was down 5.1%.
Under its retirement plan, the Postal Service has to fund into the future, preparing for heath obligations for future retirees. This sort of funding is different from most other agencies, and it has weighed on the service, particularly in recent years.
This year the service owed $11.1 billion after defaulting on payments for its future retirees fund. The additional $5 billion came from hits to mailing operations.
And like most other companies, the Postal Service is very concerned about the impending fiscal cliff.
From the New York Times:
“The Postal Service is facing a fiscal cliff of its own, and any unanticipated drop in mail volumes could send the agency over the edge,” said Art Sackler, a coordinator of the coalition [for a 21st Century Postal Service]. “If Congress fails to act, there could be postal slowdowns or shutdowns that would have catastrophic consequences for the eight million private-sector workers whose jobs depend on the mail.”
But the service plans to keep up operations as usual. Even if it's hit its debt limit, and even if it's getting dangerously close to insolvency, it expects some help from the holiday season.
It also gained $500 million in revenue from the election season alone. Campaign mailings and other political press brought in additional revenue that helped save it from an expected $100 million cash crunch.
Still, it's banking on some help from Congress to provide financial easing. One major help would be a five-day mail delivery schedule rather than the current six.
And changes to the future retiree health fund are critical.
From Raw Story:
“Our liquidity continues to be a major concern and underscores the need for passage of legislation that gives the Postal Service a more flexible business model to improve its cash flow,” said [chief financial officer Joseph] Corbett.
Without a Congressional bailout, the USPS could slide straight right into insolvency.+8
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