Tuesday, June 9, 2009

I’ll be back. Hasta la vista, Baby.

I shall return. --General Douglas MacArthur

I’ll be back. Hasta la vista, Baby.
--The Terminator

The Postal Service will make a comeback.
--Dan Blair, Postal Regulatory Commission Chairman

Two of out three ain’t bad. MacArthur did get back to the Philippines within a few years. The terminator has come back several times. The
USPS? Well…to be continued.
Hemorrhaging money for a decade, the United States Postal Service has closed plants, pulled most of the once ubiquitous curbside blue boxes because they were so manpower intensive, begged tens of thousands of employees to take early retirement, turned to automation processing equipment (non-unionized, non-salaried, and not prone to take breaks, sick leave or vacations), and has generally taken many drastic measures to stem the bleeding.

It isn’t working.

Last fiscal year the USPS lost a whopping $3B. That in itself was mind boggling until the 2009 FY prediction was announced. As currently predicted, the USPS stands to lose $12B in 2009.
There simply aren’t enough people eligible for early retirement—though recent rumors pegged another 150,000 possible “volunteers”—to help make up the difference.
What’s going on here?

In a nutshell, it’s the economy, stupid.

Much of the loss is attributed to lower mail volumes. In FY 2008, mail volume dropped by 4.5% over FY2007. But during January and February of 2009, volume had further plunged 16% year over year.

By February, First Class mail was down by 12.2% and Standard mail by 21.7%. Standard mail—the longtime moneymaker for the USPS—has been hard hit by the economy. USPS management expects Standard will rebound with the economy.

Since the USPS workforce is hard to shrink further, maybe the USPS can shrink the week instead. Hence the rumors floating around DC of mail deliveries only 5 days a week. A study estimates the USPS could save $2B a year by going to 5-days-a-week. So far Congress has not been receptive, even though the Postal Regulatory Commission says 2/3 of the American public “has no problem” with the proposal.
At present, there is no consensus on which day of the week to axe; whether the switch would be temporary or permanent; whether it would be year-round or seasonal, and whether high-volume holiday periods would be exempted.
Speaking of Congress, there are other rumors flying around DC that the postal service may need a bailout like the automakers. So far these rumors are unsubstantiated, but don’t be surprised. You can’t lose $12B a year too many years in a row. Just ask Chrysler and General Motors.
Anyway, to help spur activity in Standard mail, the USPS announced a “Summer Sale” in May. Unfortunately, the historic reduction in postage doesn’t help most of us. Only the largest 5% of mailers in the US qualify. Bottom line: There’s no “there” there for most of us.

The intelligent mail barcode (IMB) was also promoted as a cost savings venture. If used by enough mailers, it would allow the USPS to track mail and monitor delivery performance like UPS and FedEx. As incentive, the USPS promised a rebate—a whopping 1/10 of one cent—for every packaged mailed using the IMB.

IMB is slow to take off. Today, fewer than 20% of mailers are using it. Why? The steep cost to buy-in may be a deterrent. Duh! It takes a whole lot of mail at 1/10 of one cent to recoup that hefty fee especially in an economy when we’re seeing mail volume fall into the abyss.

Give me a minute. Hmmm. Spend several thousand dollars to see where my mail went? Or keep it in my pocket. Just in case.

Easy call!
Hey Post Office, Get back to me when the economy improves!
Hasta la vista, Baby.

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