The United States Postal Service (USPS) yesterday formally defaulted on a $5.6 billion payment is was scheduled to make, the second time in 60 days that it did not make a scheduled multi-billion dollar payment.
The Associated Press reports that "it expects to make a $1.4 billion payment due to the Labor Department on Oct. 15 for workers' compensation. Cash levels are expected to hit a low after that labor payment before rising again due to increased volume from holiday and election mail, including ballots for early voting."
Postmaster General Patrick Donahoe says that if it were not for Congressional inaction, the USPS would be profitable. "For more than a year, the Postal Service has been seeking legislation that would allow it to eliminate Saturday mail delivery and reduce its $5 billion annual payment for future retiree health benefits," the AP writes. "Since the House failed to act, the post office says it's been seeking to reassure anxious customers that service will not be disrupted, even with cash levels running perilously low ... The Postal Service originally planned to close low-revenue post offices in rural areas to save money, but after public opposition it now is moving forward with a new plan to keep 13,000 of them open with shorter operating hours. The Postal Service also will begin closing more than 200 mail processing centers next year, but the estimated annual savings of $2.1 billion won't be realized until the full cuts are completed in late 2014."
The Associated Press reports that "it expects to make a $1.4 billion payment due to the Labor Department on Oct. 15 for workers' compensation. Cash levels are expected to hit a low after that labor payment before rising again due to increased volume from holiday and election mail, including ballots for early voting."
Postmaster General Patrick Donahoe says that if it were not for Congressional inaction, the USPS would be profitable. "For more than a year, the Postal Service has been seeking legislation that would allow it to eliminate Saturday mail delivery and reduce its $5 billion annual payment for future retiree health benefits," the AP writes. "Since the House failed to act, the post office says it's been seeking to reassure anxious customers that service will not be disrupted, even with cash levels running perilously low ... The Postal Service originally planned to close low-revenue post offices in rural areas to save money, but after public opposition it now is moving forward with a new plan to keep 13,000 of them open with shorter operating hours. The Postal Service also will begin closing more than 200 mail processing centers next year, but the estimated annual savings of $2.1 billion won't be realized until the full cuts are completed in late 2014."
- KC's View:
- I'm not going to argue that because of Congressional mandates, it is a lot harder for the USPS to be viable. But I also continue to believe that in the long run, for the USPS to have a sustainable business model, it has to consider how the world is changing and perhaps make fundamental changes in its business model. In any business, you have to ask the hard questions about core values ...
