The Postal Service is in much better financial shape than advocates of a slash-and-shrink approach to Postal Service “reform” care to admit.
The latest financial results confirm that an unprecedented and unnecessary Congressional mandate — not the Internet — is the main cause of the Postal Service’s financial challenges. In fact, without this mandate, the Postal Service would have reported year-to-date profits. It makes no sense to cut services like Saturday mail and door-to-door delivery if those services aren’t driving the Postal Service’s red ink.
Here are the facts:
Postal finances are improving as the economy improves. Operating revenue grew by 3.6 percent in the third quarter compared to the same period last year, and expenses were down.
Shipping and package delivery revenue is increasing dramatically, up 8.8 percent this quarter compared to the same period last year, and up 7.5 percent on a YTD basis. Revenue from shipping and package delivery has steadily increased over the past three years. The growth resulting from an exploding e-commerce sector is increasingly offsetting the negative impact of online communication and bill payment on First Class mail.
If not for pre-funding, USPS would have reported a profit through the third quarter this year. In 2006, Congress passed a law mandating that the Postal Service “pre-fund” future retiree health care decades in advance on an accelerated schedule. From 2007 to 2012, these payments accounted for nearly 80 percent of the Postal Service’s reported losses, and if not for pre-funding, the Postal Service would have reported a $660 million profit in the third quarter of FY 2013. Year-to-date, without pre-funding, USPS also would be profitable.
This mandate costs the Postal Service billions each year. USPS has already put aside almost $50 billion to cover the health premiums of its future retirees for decades. The Postal Service is the only organization, company or agency in the country required by law to pre-fund retiree health benefits.
The solution is obvious – eliminate mandatory pre-funding and free the Postal Service to take full advantage of the growth opportunities offered by the digital era.
– See more at: Delivering For America
Also of interest:
Quarterly Report: USPS Finances Are Rebounding Strongly As Economy Improves
Without Pre-Funding Obligation the USPS Would Profit How Much?
When Good News Is Bad News: Postal Service Spin
A Manufactured Crisis: Congress Can Let the Post Office Save Itself Without Mass Layoffs or Service Reductions