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United States Postal Service : Need for Reform Schooling

March 2010 By Erik Cagle
Senior Editor
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IT SEEMS that Mr. ZIP no longer has a spring in his step, and it's not surprising to see why. His boss, the United States Postal Service (USPS), suffered a $3.8 billion loss for fiscal year 2009 and, frankly, it could have been worse. Had the USPS not been granted a reprieve from funding $4 billion of its required annual payments for retiree health benefits, the situation would have been more grave.

That's little consolation to one of the nation's oldest institutions. Moving forward, things look even worse for the post office. The USPS is facing a possible loss of $7.8 billion in 2010, even after implementing cost-cutting initiatives that would slice away $3.8 billion.

"When you talk about losses at the $7.8 billion level, there's not one fix anywhere that is going to bring us back to profitability," states Joseph Corbett, CFO of the USPS.

Forget for a moment that the USPS endured a 12.7 percent loss in volume from 2008 to 2009. And never mind that the volume reduction is not just a reflection of the loss of advertising mail due to the Great Recession of 2008-2009 that handcuffed heavy mailers in the automotive and financial sectors; it continues a trend toward online bill paying and other business transactions through the Internet.

Postal Reform, Part II

OK, maybe forgetting it is a bit much to ask. However, there are major fundamental problems confronting the USPS, issues apart from the aforementioned external pressures that, in and of themselves, appear daunting. There is no one pill that the USPS can take to cure all of its ills, and despite the fact that a postal reform package was just passed in 2006, it's clear that another round of reform on a smaller scale may be just what the doctor ordered.

But it's never that simple when the U.S. government is involved. Corbett sees value in a second round of reform, or legislation that can provide flexibility to the USPS in areas including:

• Reducing delivery days by one to slice $3 billion in costs;

• Addressing the retiree healthcare funding issue without making it an albatross that puts the USPS at a competitive disadvantage;

• Allowing more flexibility to institute pricing changes; and

• Providing more autonomy regarding the network configuration of the USPS, which will underscore a commitment to customer service and efficiency.



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