I just heard postage is going up again on the 27th. I don't know the new rates but I heard it will be significant.
Bummer
Bummer
USPS Postage going up again JAN 27th
- Thread starter dandeurloo
- Start date
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I have long seen the PO as an icon for government run business. Years ago, and perhaps still there was utility to physical mail delivery as important infrastructure to support commerce. The writing was on the wall with electronic bill payment gutting their cash cow of regular monthly first class postage for several payments usually sent over short distances so very profitable.
To a lesser extent, email and social media has dramatically reduced first class mail for personal communication.
So they are both saddled with a rapidly shrinking business model, huge fixed costs in buildings, and huge liabilities from generous benefits to postal workers. The elephant in the room is that not only did the postoffice not pre-fund retirement benefits for all it's workers in the past, but didn't even reflect the current amount of this accrued liability as a cost, so overstated their operating profit/loss.
In 2006 congress forced them to start pre-funding retirement benefits and last summer they missed a $5B+ payment for that. I have seen estimates as high as $100B for that unfunded liability (by end of decade?). Taxpayers are expected to make up any shortfall from the PO. Their shrinking revenue does not look promising.
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For one (perhaps) positive note, the PO seems aggressive in their pricing for small parcel delivery. When placing small parts orders the PO delivery option is often half the price of UPS/FEDEX for small/light packages. I find it hard to believe that they are more efficient than their parcel competitors, so it appears they are buying that small package business. Maybe they are losing money, planning to make it up on volume (an old joke), or using this as a loss leader to attract other business (what other business?). I hope they are able to break even but not optimistic.
I would hate to see my local PO close, but they need to run a tighter ship... In what world does a $3M sponsorship of Lance Armstrong's cycling team make sense? I thought the tour de france was like held in Europe? ;D Who are they trying to impress with that rather expensive marketing promotion.
This would be stupid, if Lance wasn't doping, now it's even more embarrassing. Maybe if they are quick they can get in front of the line forming to sue Lance, now that Oprah has coaxed the truth out him...
Seriously the PO raising their prices for FC stamps has little impact on me these days.. I haven't bothered to remember what first class postage is for years. Since UPS/FEDEX didn't follow them all the way down, maybe they will raise the prices on their small parcel delivery. I just buy the forever stamps so I, still won't have to bother with it, for my very seldom items posted.
It appears that the "forever" stamps are a hit with the public, so now they will offer a similar international forever stamp. The beauty of the forever stamps for the post office, is customers buy books of them in advance, so the PO gets paid up front for postage services they deliver later or maybe never if stamps get misplaced. This is much needed cash flow that they desperately need, and while technically another liability, not much of a concern like the unfunded retirement benefits.
JR
To a lesser extent, email and social media has dramatically reduced first class mail for personal communication.
So they are both saddled with a rapidly shrinking business model, huge fixed costs in buildings, and huge liabilities from generous benefits to postal workers. The elephant in the room is that not only did the postoffice not pre-fund retirement benefits for all it's workers in the past, but didn't even reflect the current amount of this accrued liability as a cost, so overstated their operating profit/loss.
In 2006 congress forced them to start pre-funding retirement benefits and last summer they missed a $5B+ payment for that. I have seen estimates as high as $100B for that unfunded liability (by end of decade?). Taxpayers are expected to make up any shortfall from the PO. Their shrinking revenue does not look promising.
=====
For one (perhaps) positive note, the PO seems aggressive in their pricing for small parcel delivery. When placing small parts orders the PO delivery option is often half the price of UPS/FEDEX for small/light packages. I find it hard to believe that they are more efficient than their parcel competitors, so it appears they are buying that small package business. Maybe they are losing money, planning to make it up on volume (an old joke), or using this as a loss leader to attract other business (what other business?). I hope they are able to break even but not optimistic.
I would hate to see my local PO close, but they need to run a tighter ship... In what world does a $3M sponsorship of Lance Armstrong's cycling team make sense? I thought the tour de france was like held in Europe? ;D Who are they trying to impress with that rather expensive marketing promotion.
This would be stupid, if Lance wasn't doping, now it's even more embarrassing. Maybe if they are quick they can get in front of the line forming to sue Lance, now that Oprah has coaxed the truth out him...
Seriously the PO raising their prices for FC stamps has little impact on me these days.. I haven't bothered to remember what first class postage is for years. Since UPS/FEDEX didn't follow them all the way down, maybe they will raise the prices on their small parcel delivery. I just buy the forever stamps so I, still won't have to bother with it, for my very seldom items posted.
It appears that the "forever" stamps are a hit with the public, so now they will offer a similar international forever stamp. The beauty of the forever stamps for the post office, is customers buy books of them in advance, so the PO gets paid up front for postage services they deliver later or maybe never if stamps get misplaced. This is much needed cash flow that they desperately need, and while technically another liability, not much of a concern like the unfunded retirement benefits.
JR
Andy Peters
Well-known member
JohnRoberts said:
The amount of pre-funding is excessive, much more than any other business would ever be required to do.
That "other business" is actually being the "last mile" for FedEx and UPS for locations where the private shippers do not want to maintain a presence. Obviously these are mostly rural areas we are talking about, locations where the need those services is infrequent. (Which seems kind of odd, since it's the rural areas without the big malls which would seem to need shipping services the most -- if you can't buy it locally and you need it, having it shipped in is the only way to go. )
-a
I didn't review the details of that 2006 legislation, but up to that point, the PO was apparently paying retirement benefits out of their current cash flow. The uncertain future of that cash flow being adequate means payments going forward have a lot of catch-up to do to reach a level reflecting only new liabilities. A private business would probably be allowed to go bankrupts to escape the unfunded liability. (or bailed out like big car companies).Andy Peters said:
I live across the street from my local post office so unfortunately I know a little too much about small town PO business in the rural hinterlands.
I see regular often daily deliveries to the PO from UPS,FEDEX, and other carriers. In addition to at least two (perhaps 3) daily PO truck drop-off/pick ups.
I also personally experience some silly inadvertent consequences of that last-mile strategy, where all my running shoe deliveries from one internet vendor end up going through the PO. So I see the UPS truck drop off my packages to the PO across the street from me in the afternoon. Sometimes on the same day that UPS makes a different delivery to me. If I am not alert to check the tracking advice when I am waiting for shoes to arrive, I may have to wait until the next day when the PO is open to get my shoes.
What would make some sense is for the local PO to expand their partnership to become a local rural shipment originator/drop-off location for UPS/FEDEX/etc. But this seems in direct conflict with their desire to compete with them directly for parcel delivery. The hybrid they now operate seems a little conflicted.
A future for the PO might involve expanding to be more of a local agent/representative for the federal government so more government business could be transacted there. They already handle passports (in larger POs), perhaps more along those lines. At least this would somewhat justify taxpayer subsidizing the operation.
The PO does a lot of arm waving about not taking taxpayer dollars.... but... in 2012 they defaulted on federal loans twice totaling $11B. Prior to 2005 they had no debt, but like I posted earlier a HUGE unfunded liability for future retirement benefits. Since 2006 they have put tens of $B into a trust against the liability. They may need to adjust down the rate they build that trust fund, but I don't feel very lucky about the taxpayer loans getting retired ahead of their other bills. Their business model and revenue stream seems challenged.
JR
Andy Peters
Well-known member
JohnRoberts said:
The bill required the USPS to pre-fund the health insurance benefits for future retirees for 75 years, and that pre-funding had to be completed in ten years. I recall reading that this pre-funding was about $5 billion a year.
No private business does this (or can do it, they'd go bankrupt), nor does the Federal government require it for any other agency.
-a
I'm shocked.. the government being too conservative about funding future retirement cost... was that "our" government? Doesn't sound like them. 8)
Trying to research this on the WWW returns one view that this is an attempt to bankrupt the PO so other delivery business interests can benefit, and 'break" the postal workers union. A more reasoned review suggests that indeed the payment schedule to pre-fund the retirement liability is too aggressive. I am not sure how they arrived at that $55B funding requirement by 2017 ( $5.5B per year for 10 years). I suspect they might have looked like they could pay at that rate back then. While not wildly profitable they had surpluses before then. I have heard suggestions that the Liability could reach $100B by then so opinions vary about how much is needed.
At this point the payment schedule seems moot, since they don't have the $5.5B per year to pay... unless we lend that to them too.
I'm OK with freeing them to operate as a completely separate business with no expectation of more loans or support from the US government, but that is not even reasonable. Just looking at that 2006 bill that covered far more than their unfunded retirement liability, There are a number of new and old restrictions on how the PO must operate their business. We need to lift the government micromanagement across the board and cut them loose to compete, completely...or accept the liability for owning them. No wonder they are so screwed up.
This is pretty typical of how congress fixes stuff.. this is a cluster_f*sk
The former plan of paying retiree benefits out of cash flow doesn't seem like a very good outcome for the retirees either. Congress correctly predicted their surplus cash flow would dry up, but got the timing a little off. I wonder how much this will end up costing us (taxpayers)..? Maybe they can sell the PO to FEDEX or UPS. UPS should have some extra cash laying around since the euro zone regulators just stopped them from buying a large European shipping company (TNT).
JR
PS: I think UPS is teamsters so maybe the teamsters and postal workers union can merge if UPS buys the PO. (kidding).
Trying to research this on the WWW returns one view that this is an attempt to bankrupt the PO so other delivery business interests can benefit, and 'break" the postal workers union. A more reasoned review suggests that indeed the payment schedule to pre-fund the retirement liability is too aggressive. I am not sure how they arrived at that $55B funding requirement by 2017 ( $5.5B per year for 10 years). I suspect they might have looked like they could pay at that rate back then. While not wildly profitable they had surpluses before then. I have heard suggestions that the Liability could reach $100B by then so opinions vary about how much is needed.
At this point the payment schedule seems moot, since they don't have the $5.5B per year to pay... unless we lend that to them too.
I'm OK with freeing them to operate as a completely separate business with no expectation of more loans or support from the US government, but that is not even reasonable. Just looking at that 2006 bill that covered far more than their unfunded retirement liability, There are a number of new and old restrictions on how the PO must operate their business. We need to lift the government micromanagement across the board and cut them loose to compete, completely...or accept the liability for owning them. No wonder they are so screwed up.
This is pretty typical of how congress fixes stuff.. this is a cluster_f*sk
The former plan of paying retiree benefits out of cash flow doesn't seem like a very good outcome for the retirees either. Congress correctly predicted their surplus cash flow would dry up, but got the timing a little off. I wonder how much this will end up costing us (taxpayers)..? Maybe they can sell the PO to FEDEX or UPS. UPS should have some extra cash laying around since the euro zone regulators just stopped them from buying a large European shipping company (TNT).
JR
PS: I think UPS is teamsters so maybe the teamsters and postal workers union can merge if UPS buys the PO. (kidding).
> PO delivery option is often half the price of UPS/FEDEX for small/light packages.
I am 3 to 30 miles out-of-the-way for the FedEx or UPS drivers.
The mail-lady goes past EVERY day.
So the incremential cost of tossing a parcel here is very different.
As you say, there is a deal where FedEx brings a box 100 or 1,000 miles to the PO in the city near me, the PO brings it the last 5 miles when it's convenient for the mail-lady.
At least they are starting to get it right. The first few times, FedEx dropped at the PO, the PO put it back in the FedEx system 3 states south. Twice it finally got here a week late. Once it was going on three weeks, I contacted Amazon, they overnighted a duplicate and the UPS lady zoomed up my drive like my butt was on fire. (The lost shipment came a day later.)
(As *you* know, the PO can barely manage 2 out of 3 heavy boxes at once.)
Then there are the newspaper carriers. It's getting hard to get delivery. Yet twice recently the Bangor paper's carriers have been first at the scene of news. Once a hit-n-run at 3 am, and another arrived as smoke was coming out of a house.
I am 3 to 30 miles out-of-the-way for the FedEx or UPS drivers.
The mail-lady goes past EVERY day.
So the incremential cost of tossing a parcel here is very different.
As you say, there is a deal where FedEx brings a box 100 or 1,000 miles to the PO in the city near me, the PO brings it the last 5 miles when it's convenient for the mail-lady.
At least they are starting to get it right. The first few times, FedEx dropped at the PO, the PO put it back in the FedEx system 3 states south. Twice it finally got here a week late. Once it was going on three weeks, I contacted Amazon, they overnighted a duplicate and the UPS lady zoomed up my drive like my butt was on fire. (The lost shipment came a day later.)
(As *you* know, the PO can barely manage 2 out of 3 heavy boxes at once.)
Then there are the newspaper carriers. It's getting hard to get delivery. Yet twice recently the Bangor paper's carriers have been first at the scene of news. Once a hit-n-run at 3 am, and another arrived as smoke was coming out of a house.
Ptownkid
Well-known member
You guys are lucky...Canada Posts prices are usually much higher than USPS. I can't send a package withing CANADA for under $10.
PRR said:
yup, i recall.. several of those loose AES journals found their way back to me like homing pigeons.. or bad pennies. I am apparently not as rural as you... maybe 20 miles from a 50k peep city, and only a few miles on a main road from the interstate exit, so I see many delivery vehicles go by every day.
I get a daily newspaper (WSJ) delivered by the PO, and routinely get my newspaper a few days late. While they have a pretty good system set up to print the newspaper regionally in distribution centers, that are close enough, and most arrive while the ink is still damp, but all to often my paper gets misrouted somewhere between that printing plant, and my local PO, so it takes days to finally reach me after the first misroute since it has to slowly back track one level at a time up the distribution system, to get back on the faster path down and out to me. Newspaper is printed at dark o'clock and in my PO box at 8AM on good days.
Yup the PO is not a highly functioning machine. It seems something like my newspaper could use bar code to eliminate human routing errors but what would I know?
JR
Ptownkid said:
I am not confident that the low cost small packages are actually covering the PO's actual costs. They are losing money at the moment and I'm not convinced raising first class postage will be the final solution.
I like them being aggressive about the small parcels since they need to keep their infrastructure busy. But they have a huge challenge ahead if they can't divide the pie profitably with other parcel delivery services.
If we decide we want to subsidize the PO, lets just do that, but the make believe posturing that they are independent while we micromanage how they can compete will end badly. IMO
JR
Meathands
Well-known member
JohnRoberts said:
Agreed. We have that funny climate where we're afraid to call a subsidy a subsidy. I think having a $3.30 domestic and $15 international shipping option for 13 oz packages probably doesn't hurt the economy.
