Epic Fail: USPS Is Nearing Default

Epic Fail - USPS Is Nearing Default

In the epic battle for mail delivery, the snails are getting their arses kicked, evidently. And by snails, I’m not just referring to the delivery of the mail (hey, UPS and FedEx are fine). I’m referring to the bureaucrats in our government who can’t seem to navigate their way out of a paper bag, or in this case a Priority Mail Small Flat Rate Box (albeit those things can be a little tricky sometimes)..

This utter lack of business acumen and the unfortunate willingness to circumvent the health of the United States Postal Service for the sake of political popularity has placed the agency on the path to Nowheresville which they’ve been successfully delivering mail to now for quite a few years. So they can deliver the mail; that’s not the problem.

The problem is, according to the New York Times:

[T]he agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.

This is new. While the USPS has had financial troubles for quite some time, the level of urgency regarding this matter is at an all-time high:

“Missing the $5.5 billion payment due on Sept. 30, intended to finance retirees’ future health care, won’t cause immediate disaster. But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.” [NYT]

The biggest contributors to the problem have to do with laws, contracts and other regulations that prevent the USPS from competing with the other private mail delivery agencies and thus generating revenue. While some of the laws may be appropriate, the shear severity of the shackles on the USPS is unparalleled:

  1. The law prevents USPS from raising postage fees faster than inflation.
  2. Contracts with labor unions have tied the hands of management with regard to laying off employees. Employees who work for 6 years – 20 out of 26 pay periods in paid status in each year – cannot be laid off. But evidently they can be fired.
  3. Congress has mandated through the Postal Accountability and Enhancement Act of 2006 (PAEA) that the USPS prefund retiree health benefits to the tune of $59 billion in ten years through 2016. That’s in addition to their annual premium contributions for their retirees that now approaches $2.5 billion.

That’s just three of the biggies. There are more and if Congress doesn’t take notice the USPS will in all likelihood be insolvent by the end of the month. And beginning in January, they will start shutting down operations entirely.

While letters and text messages are now the domain of the internet, it’s the packages big and small that will take a major hit. Congress isn’t worried though; they’ve already figured out a way to tweet their packages across the country and all over the world. So don’t hold your breath for the USPS.

Oh and BTW, the Postal Service receives no tax dollars for operating expenses relying solely on the sale of postage, products and services to fund its operations.

67 billion revenue in 2010, in dollars
171 billion total number of mail pieces processed in 2010
563 million average number of mail pieces processed each day
23 million average number of mail pieces processed each hour
391,000 average number of mail pieces processed each minute
6,516 average number of mail pieces processed each second
40 percentage of the world’s card and letter mail volume handled by USPS
1.9 billion dollar amount paid every 2 weeks in salaries and benefits
 574,000 number of career employees
 75 million number of work hours reduced in 2010 – equal to 42,800 full-time employees
 215,625 number of vehicles in the Postal Service fleet — the largest civilian fleet in the world
 1.25 billion number of miles driven each year by our letter carriers and truck drivers
 399 million number of gallons of fuel used in 2010
 31,871 number of postal-managed retail locations nationwide
 41.5 million number of address changes processed in 2010
 1.3 million number of people who visit usps.com each day
 223 million dollar amount of online stamp and retail sales online at usps.com in 2010
 423 million total revenue, in dollars, from Click-N-Ship label purchases in 2010
 6.7 million number of passport applications accepted in 2010
 123.6 million number of money orders issued in 2010
 577 million dollar amount generated from Automated Postal Centers in 2010
 63,000 number of stores, banks and ATMs that sell postage stamps
 735,779 number of new delivery points added to the network in 2010
 0 tax dollars received for operating the Postal Service