US Postal Service Calls for Price Increases Amid Record Losses

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The US Postal Service has seen record losses as traditional mail is replaced by electronic means. Without enough money to pay for years of employee benefits, the agency is calling for legislation to enable them to raise their prices.

On Thursday, the USPS reported losses of $2.1 billion in the third fiscal quarter of 2017, compared to a $1.6 billion loss in the same quarter last year.

Over the past 10 years, the USPS has incurred a net loss of $63.3 billion and they project future losses without legislative and regulatory changes.

The agency also warned that it will likely have to default on $6.9 billion in payments for future retiree health benefits and pensions, according to the Associated Press. From 2012 to 2016, the USPS has defaulted on $33.9 billion in Postal Service Retiree Health Benefits Fund prefunding payments.

If their debt is not addressed soon, the American taxpayer will likely have to cover the costs when future employees retire and cash in on their benefits, to which they are legally entitled.

In order to keep the agency running, US Postmaster General Megan Brennan suggested a new pricing system that would allow them to cover its costs.

In the third quarter, the Postal Service recorded an increase in packages or approximately 11 percent, but saw a decline in letter mail, which make up 70 percent of their annual operating revenues, by approximately 1.4 billion pieces or around four percent. Combined, the year-to-date volume has declined by more than 3 billion pieces.

“The growth in our lower-margin package business is not sufficient to make up for the accelerating mail volume declines,” Brennan said in the announcement. “Our financial situation is serious, but solvable.”

However, the Postal Regulatory Commission (PRC), an independent panel that monitors and regulates USPS, is due to conclude a 10-year review of the postal service’s rate-setting system this year. The PRC could remove the price cap on stamps.

“Our financial situation is serious, but solvable,” Brennan said, citing an unreasonable rate cap that restricts stamp price increases to the rate of inflation. “We’re clearly looking for the PRC to establish a new pricing system for us.”

The Postal Service is also looking to invest in new fuel-efficient delivery trucks and other innovations to compete with new forms of competition.

“The volume declines in mail are expected to continue due to the ongoing migration from mail toward electronic communication and transaction alternatives,” Joseph Corbett, Chief Financial Officer and Executive Vice President, said in the announcement. “To address this trend, we have focused on innovations, including mobile and digital strategies, to improve the value of mail. We must also continue to focus on reducing expenses and improving efficiencies, including adjusting employee staffing and scheduling to match the changing workload.”

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  • dav1bg

    Maybe they should sell some of their hollow point ammunition to make up the shortfall.

    • lee ho fook

      Very very good!!!!

  • They wouldn’t be in such debt if they didn’t have the dirty unions. Get rid of them and the lazy letter carriers need to stop ruining peoples packages like ours.

    • I don’t know where you are having such problems, but here in Wyoming, the USPS delivers better than UPS or FedEx, which they now deliver for, as well, as long as the shipper selects SurePost or SmartPost respectively. I love being able to get all my parcels where I get my mail, at a PO Box. All our rural routes are delivered by private contractors. There is no reason why all the mail couldn’t be.

      • roddy6667

        Rural residents cost a lot more to service than urban residents, with the homes so far apart. They city folk subsidize the country folk heavily. No wonder you are happy–you are getting nearly a free ride!

        • All three of their rate structures are based on zip code to zip code regardless of where in the zip code the package originates or is delivered. They don’t sweat the small stuff that you imagine.

        • ReverendDraco✓ᵛᵉʳᶦᶠᶦᵉᵈ ᵃᶜᶜᵒᵘᶰᵗ

          “…where I get my mail, at a PO Box.”

          Last I checked, P.O. boxes were in population centers, not in the country.

    • lee ho fook

      I’ve noticed the letter carriers (the black female ones) are always talking on their cellphones…

  • They could solve the problem if Congress would completely privatise them, instead of keeping control over an agency that would be making money aside from Congressional blood sucking.

    • Nexusfast123

      That is not a good strategy. Their core business model which is letter mail is collapsing and they have high fixed costs. it would be easy to change direction via US Post becoming a custodian of ‘digital’ information, a community ‘hub’ to reuse its retail outlets and operate as a community bank. That requires vision and political support but that will not come as politicians in the US are owned by the banks.

  • The Tuna Fairy

    Raising the price of first class letter stamps will just result in even less letters being sent. This is bad math. Do these folks not send and receive mail themselves? They are pricing themselves out of the market.

    Anyone know if there’s any truth to the rumors Amazon ships so cheaply that the PO loses money on the deal?

    • lee ho fook

      huh? Amazon ships CHEAPLY? On which planet?

      • Nexusfast123

        They only survive as they cross subsidise their businesses. Hence the recent moves to look at Anti Trust legislation.

      • The Tuna Fairy

        Not how much they charge you to get things shipped, how much they pay the PO for doing the shipping.

    • roddy6667

      Who sends letters? Is there anybody left who uses snail mail? Why would anybody do that?

      • Nexusfast123

        It is made up of utility bills, mail shots, etc. All in decline as information goes digital.

    • Nexusfast123

      Does not matter as letter mail is collapsing globally.

  • roddy6667

    Are they still open? I thought they closed right after Circuit City.

  • stan

    Get rid of the USPS and you’ll be very sorry somewhere down the road. Just because YOU don’t get mail doesn’t mean our economy and lifestyles don’t need the PO. You’d rather have Jeff Bezos in charge of your everyday life?

  • jim_robert

    Wouldn’t it be nice if every time you screwed up YOUR business, you could just FORCE your price increases down the throats of customers. Kinda like the state of Illinois, come to think of it.

  • Phil_Ossifer

    How about they leave First Class alone and raise the rates for bulk mail, most of which is junk mail that gets thrown away as soon as it’s removed from the customer’s mailbox? The greenies would definitely get behind that one because of all the trees it would save.