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Commission Denies Postage Rate Hike Request by Post Office

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News alert: The United States Post Office is hemorrhaging money.

It’s estimated that the USPS will lose a staggering $7 billion in 2010 after losing nearly $4 billion last year. If you’re wondering why you get so much junk mail, it’s because “business mail” is one of the few profitable parts of the existing mail volume. According to Postmaster General John E. Potter, 90% of the revenue comes from business mail. Media mail, which I’m a big fan of, is unprofitable. Magazines are unprofitable.

When the Postal Regulatory Commission decided last week that the Post Office couldn’t raise the price of postage, I thought it was a great idea. This forces the USPS to address it’s structural problems… unfortunately everything they do requires Congressional approval, which takes forever. The USPS had requested an increase of 5.6% (averaged across all mailing methods). Normally, rate hikes are capped at inflation but with the recession, retiree benefits, and other demands, they are permitted to request an increase.

Postal Service denied rate hike [CNN Money]

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9 Responses to “Commission Denies Postage Rate Hike Request by Post Office”

  1. billsnider says:

    You have to understand a few things abou their problem.

    85% of their costs are for labor, including pensions and medical. There is a COLA on this cost which aggravates the problem.

    They are mandated to deliver to each and every person in the US and territories. UPS, FED EX, etc will not deliver to remote areas. They defer to the USPS.

    They are not free to do what they want. The postal rate commission has to approve nearly everything. Each request to them takes an eternity to rule on.

    Then there is congressional oversight as well. Need I say more about this problem?

    Then there is electronic media nipping at their heals. The USPS is a very large battleship. They can’t react fast enough to this problem given the restraints mentioned above.

    Then we ask ourselves why they can’t do their job.

    Bill Snider

  2. Many years ago I thought I read a study that showed the Post Office being the only profitable arm of the government… I guess as times change and costs increase (including gas for the postal cars), the Post Office is facing the same challenges as all other businesses.

    For now, I am glad that they denied the increase. I do think that the Post Office needs to look within to see if they can alter how they use resources to help meet budget.

    I have heard rumor of a 5 day mail delivery option (dropping Saturdays). This may become more reality and less rumor if things don’t change…

    • Jim says:

      I don’t think the USPS has been profitable in quite some time… the only profitable arm is the IRS/Treasury. :)

      • billsnider says:

        When the post office raises rates, they do it with a multiple year perspective. Generally it was for three years. year 1 a surplus, year 2 breakeven and year three a loss. In total they broke even.

        Revenue is dropping faster than they expected and costs are rising faster than expected. Thus they have been asking for almost yearly increase. By law they are limited to the amoun they can raise rates. so they are now on a 1-2 year cycle.

        As to 5 day, this idea also includes getting rid of small delivery areas. Both these ideas are not looked at favorably by confress and the psotal rate commision.

        Given that the cost structure is 85% labor (with the concurrent health and retirement add ons), the UPS has to reduce staff. Needless to say this is unpopular with congress.

        So, the spin and the problem goes on.

        Bill snider

  3. Vic says:

    Maybe they could start here…

    http://ohmygov.com/blogs/general_news/archive/2009/09/11/Postal-Service-sticks-employees-in-a-closet-and-pays-them.aspx

    “Employees are forbidden to engage in any activity that they wouldn’t do while performing normal work, this includes everything from listening to music to reading a book. “We want to make sure they uphold the rules and regulations of the Postal Service,” Edward Jackson explained to the Times. ”

    If they’re not doing anything, how about letting them train for a new job and give them a package?

  4. CARL says:

    Instead of rate increases to gain more revenue, US Postal Service can retain millions of dollars CURRENTLY SQUANDERED by lost worker time CUSTOMER DISSATISFACTION, AND RUINED PUBLIC GOODWILL when mail carriers take cigarette breaks and other time off at apartment complexes, where they use their influence to obtain keys to gated and locked private facilities, such as recreation rooms and swimming pools.
    Here is a complaint recently submitted to USPS online:
    “On June 11, 2010 hold mail was requested by me to end June 16, 2010,and I arranged to be at home all day on June 16, 2010 to receive the volume of mail expected to exceed the capacity of my mailbox. The day before, when I returned home from travel, staff in the apartment complex office knew I had been gone because the mail carrier had told them of the hold mail.
    On June 16, 2010 at about 1:45 p.m. as I left my apartment I saw the regular mail carrier for my address driving away from the mail box cluster where my mailbox is located but when I opened it there was no mail at all. The mail carrier was at the next cluster and when I walked to that one and asked him where my hold mail was he reached to his left without needing to look, picked up a folded 8 ½ X 11 printed sheet, removed 4 pieces of mail from the fold, and handed it to me. He kept the sheet of paper and didn’t mention my hold mail but when I did he said “You got a lot of mail!”
    His tone of voice, facial expression, and body language conveyed annoyance and resentment.
    I replied that I stayed home to receive all that mail and asked him why he didn’t bring it but he refused to answer.
    About 15 minutes later I was at the recreation center of the apartment complex when I saw the same mail carrier with a large quantity of mail under his arm open the locked swimming pool gate with a key attached to a chain with all of his other keys, then unlock the recreation room door with that key and enter. There was no one in the room and it is not the address for any postal customer. He emerged several minutes later and left the way he came in, again with his own key unlocking the pool gate to exit. The key is not needed to access any mailbox on the property or to access the path to any mailbox, including the apartment manager office.
    This complaint, for which there is photographic evidence of the mail carrier at the recreation center with a large quantity of mail, seeks an end to willful misconduct by this USPS employee who:
    Violated postal rules by knowingly and deliberately failing to deliver hold mail after the hold ended. He knew all about the volume of mail which had accumulated and there were no events or conditions preventing delivery of the mail.
    Violated postal rules by knowingly and deliberately confiscating mail in his possession in the USPS vehicle instead of delivering it to my mailbox, handing it over to me in person only after I asked for it. Again, there were no events or conditions preventing delivery of the mail.
    Violated postal rules by carrying mail into a building which is not the home or business address of a postal customer.
    Violated postal rules by telling an unauthorized third party when my mail was on hold, a violation of the federal Privacy Act.”
    The week after the events described above, in which the mail carrier saw me photographing him engaged in misconduct, the same mail carrier entered the gated and locked areas again and used his camera to photograph me seated next to the pool, accompanied by his verbal taunts.
    Clearly, one reason FedEx and United Parcel Service are beating USPS is that they don’t coddle employees who engage in such pathological frolics.
    The water meter reader doesn’t roam about the gated and locked swimming pool and recreation room. Neither do United Parcel Service or FedEx drivers. Millions of workers all over the planet do their jobs every day without disturbing their customers at their homes in order to perform their bodily functions.
    The legal and peaceful actions I have taken in response to these problems have resulted in an ominous but lame letter from US Postal Inspector Alan A. Anderson alluding to “intimidation” of a letter carrier. They just don’t get it.

    THE POSTAL REGULATORY COMMISSION MUST IMMEDIATELY DRAFT, APPROVE AND ENFORCE RULES AND REGULATIONS FOR THE US POSTAL SERVICE TO PROHIBIT MAIL CARRIERS FROM OBTAINING KEYS TO ACCESS ANY PRIVATE PROPERTY ALONG THEIR ROUTE WHICH IS NOT THE LOCATION OF A MAILBOX, OR THE PATH NECESSARY TO TAKE TO REACH A MAILBOX; PROHIBIT MAIL CARRIERS FROM TAKING MAIL INTO ANY BUILDING WHICH IS NOT THE LOCATION OF A MAILBOX; AND REQUIRE MAIL CARRIERS TO MAKE ARRANGEMENTS ON THEIR OWN, USING THEIR OWN MEANS TO TAKE THEIR BREAKS AND LUNCH AT LOCATIONS WHICH ARE USUAL AND CUSTOMARY FOR WORKERS OF ANY OTHER COMPANY OR AGENCY TO USE FOR THAT PURPOSE, INSTEAD OF DISTURBING THE PEACE AND PRIVACY OF RESIDENTS AT LOCKED AND GATED AREAS OF MULTIFAMILY HOUSING.


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