May 9, 2014
Revenues are up modestly for the US Postal Service as First-class Mail volumes continue to tumble “extremely” but package volumes are rising; however, USPS records a $1.9 billion loss in the last quarter, despite efforts to streamline efficiency and cut costs. The rise in package volumes appears related to a “Sunday delivery” deal with Amazon.com who “found a great fit with USPS’ capability and desire.” However, USPS says it needs $10 billion for deferred investments (i.e. Capex) and warns if it does not get its bailout:
Given USPS says no new employees have been hired and flexible scheduling used for Sunday delivery, we wondered who exactly is benefiting from the taxpayer funded desperation of the USPS to do anything for even loss-making revenues?
USPS is set to deliver Amazon packages on a Sunday…
Starting this week, the postal service will bring Amazon packages on Sundays to shoppers’ doors in the Los Angeles and New York metropolitan areas at no extra charge. Next year, it plans to roll out year-round Sunday delivery to Dallas, New Orleans, Phoenix and other cities.
To pull off Sunday delivery for Amazon, the postal service plans to use its flexible scheduling of employees, Brennan said. It doesn’t plan to add employees, she said.
But the postal service partnership is the first time Clark knows of that “Amazon or really anybody else has done broad-scale Sunday delivery.”
“It’s going to be hard for others to replicate,” he said.
Clark said the postal service “just happened to be a great fit” where “capability and desire matched.”
It’s going to be hard to compete because Amazon is “using” a taxpayer-subsidized and desperate for any revenue business is put up against private companies like UPS or FedEx…
Especially when the results are so bad…
“The Postal Service is working diligently to improve its finances by streamlining our network to improve efficiency, reduce operating costs and increase revenue, which was up $379 million over the same period last year — the third straight quarter of revenue increase,” said Postmaster General and Chief Executive Officer Patrick Donahoe.
“Despite aggressive cost-cutting actions, however, we will still incur annual inflationary cost increases of approximately $1.2 billion each year, and First-Class Mail volume continues to decline,” added Donahoe.
“We haven’t been making the retiree health benefit prefunding payments because we can’t,” added Corbett. “If legislation reduced the required retiree health benefit prefunding payment, it doesn’t provide us with any more cash to pay down our debt or put much needed capital into our business. Only comprehensive postal legislation that includes a smarter delivery schedule, greater control over our personnel and benefit costs, and more flexibility in pricing and products will provide the necessary cash flows.”
In other words – if we don’t get our bailout – the pensions get it (but in the meantime, Amazon can abuse us for the cheapest taxpayer-subsidized delivery in the ‘not free’ market).
This article was posted: Friday, May 9, 2014 at 10:36 am