US Postal Service posts $3 billion loss – warns of default

Posted on

August 8th, 2011

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A few days ago Emily Stephenson of Reuters reported that, “The U.S. Postal Service posted a net loss of $3.1 billion in its third quarter and warned again it would default on payments to the federal government if Congress did not step in.” No surprise here, just look back to my blog on May 27th, 2010 https://startupselling.com/blogs/alanblume/tuesday%E2%80%99s-mail-%E2%80%93-should-your-tax-dollars-subsidize-direct-mail/, or May 19th of this year https://startupselling.com/blogs/alanblume/us-postal-service-reports-quarterly-loss-of-more-than-2-billion-snail-mail-issues/ where I made the easy prediction of a continuing and worsening USPS debt crisis.

Mail volume continues to drop, almost 3% from the same period last year, and will almost certainly continue to drop. Though the post office doesn’t use tax payer funds, guess what is likely to happen if the USPS defaults. If Congress does not intervene, USPS is unlikely to make their next multibillion payment (sound familiar?). So why are we still delivering mail 6 days a week? Surely 3 or 4 times a week would suffice. Even if the decision represents a slow payback, think of the fuel savings and positive impact on oil imports and the environment.

As was evidenced in the debt debacle, the government has been slow to move on these obvious issues, something all voters, both Republicans and Democrats can likely agree upon. But the USPS is painfully obvious. So here is a simple action plan to help resolve the USPS crisis:

Action items:

  1. Cut delivery to 4 days a week
  2. Stop advertising on TV, etc.
  3. Charge more for junk mail – you’re the only one delivering it (after all it is “junk mail” and environmentally irresponsible)

According to eHow, the average American receives 41 pounds of junk mail per year, of which almost half of the junk mail received annually ends up in a landfill. It costs almosts $320 million in local tax money to dispose of junk mail: http://www.ehow.com/how_5072539_stop-usps-junk-mail.html#ixzz1URp3Z0Kr. I liken the current USPS, 6 day per week delivery with junk mail as a primary cargo to the days of the Pony Express. The time has come and gone for delivery by pony, and the same holds true for the current delivery program. And, the USPS actually offeres a complimentary webinar training program to help small business learn about direct mail advertising, encouraging them to send more direct mail. Perhaps the thought here, is that even though they’re losing money, they can make it up in volume.

This three step plan would be a good start – and before anyone says this program will actually cause more problems or cost more in the short term – the short term pain will result in long term gain – and simply has to be done. Perhaps the day will come where mail will only be delivered once a week, as all government checks go electronic, most payments move to online venues and junk mail becomes a thing of the past.