Friday, March 19, 2010

Busting Postal Myths, Day 5, "Can't Compete"

Welcome to the last column of this week of busting postal myths. We are echoing the points made in PMG Jack Potter’s Washington Post editorial earlier this month.

Monday, we talked about the “taxpayer supported” myth.
Tuesday, we busted the “inefficient” label.
Wednesday, we discussed the “reliability” rap.
Thursday, we discussed the “harmful to the environment” charge.
Today, we’ll finish with Myth #5, “USPS can't compete with the private sector.”

The Postal Service can and does compete. Our closest competitors, UPS and FedEx, don't threaten our business; as two of our biggest customers, they help build it. Our competition pays us to deliver more than 400 million of their ground packages every year in residential areas and on Saturdays. In turn, the USPS contracts with UPS and FedEx for air transportation to take advantage of their comprehensive air networks.

Although stamp prices have increased about 33 percent over the past 10 years, this increase is in line with inflation. By comparison, private carriers raised their prices by as much as 60 percent between 1999 and 2009. The Postal Service is, and has always been, a bargain.

It's no secret that the Postal Service has been losing money since 2007. What are not well known are the financial demands of the Postal Reform Act of 2006 -- demands not faced by the private sector. Though the USPS is self-supporting, its finances are tied to the federal budget because postal employees participate in federal retirement plans. In 2006, Congress required that the USPS prefund 80 percent of future postal retiree health benefits. This will cost more than $5 billion a year through 2016. No other federal agency or private company carries such a heavy burden.

Without the prefunding requirement, the Postal Service would have been better able to weather the recent recession. In 2008, prefunding contributed to a loss of $2.8 billion. Without it, we would have been $2.8 billion in the black.

What do you think about this myth? Comment here.


Anonymous said...

This is a myth that Postal Management wants to encourage. They feel the higher the deficit, the likelihood of public sympathy. Remember this is a contract year for APWU, and the USPS is asking for more FLEXIBILITY with their employees. I've heard news reporters stating that we lost over $7 Billion Dollars last year. This is not true, our lost figure is from a PROJECTION of revenue to be made. They can easily clear this up, by publizing the true figure.

Anonymous said...

PMG I do NOT understand the logic. In one breath he says we have to cut cost by going to 5 days delivery.
In the next breath he talks about 2of our largest customers who dont deliver 6 days a week in general. And now the USPS wants to be like them.
I would look at waste, inefficient buildings and employees.
The USPS has set standards but I dont see anyone following them.

Anonymous said...

I agree that it's iron how we still promote the idea that we deliver on Saturday at no extra cost at the same time we're trying to do away with Saturday delivery. I know the pre-funding of retiree health benefits is a big hit every year but I also worry that if we do not pre-fund them there will not be any money for those benefits in the future. Supposedly 50% of our employees can retire in the next 10 years and they will either not be replaced or be replaced with part-time help. We also expect volumes to continue to decrease. So if we "pay as you go" for retiree benefits, where is the money going to come from? Will the government pick up the tab if USPS falls short? I doubt it - most likely retirees will just lose those benefits when they need them most.


Benny - I feel like you're preaching to the choir here. Everyone who receives these messages is or should be aware of fact versus fiction. The general public needs to know what's what. As noted above, some is posturing to put us in a better position for upcoming negotiations with our unions. The unions should want to be sympathetic to our situation if they wish to maintain any employees to manage.

Anonymous said...

I agree with WAYWARDCATS but would like to make one other point. I have read this in at least 3 or 4 places- from you, western word, the bottom of the EXFC numbers, and locally. I have things that need to be done other than reading the same info (we already know) over and over.