The Valdez Star - Serving Prince William Sound and Copper River Basin

By LEE REVIS
Editor, Valdez Star 

Package delivery volume explodes, but Postal Service is still in the red

Report blames Congressional mandate to prefund pensions and health care

 

November 29, 2017



There are few institutions serving Valdez that are more important than the U.S. Postal Service - and few that are more financially beleaguered.

Judging by the volume of parcels delivered daily to Valdez it would be difficult to tell that the Postal Service as a whole is still losing money. Lots of it.

The beleaguered institution reported a financial loss earlier this month for the 11th straight year. The report points at declining mail volume and it's biggest nemesis - the costs of its pension and health care obligations.

December's strong holiday season of package deliveries and January's planned price hike of first-class stamps, from 49 cents to 50 cents, will not make up for its projected losses.

Without a fix "our financial results will continue to deteriorate and likely at an accelerated rate," said Postmaster General Megan J. Brennan. "We cannot generate enough revenue or cut enough costs to pay all of our bills."

The Postal Service says it lost $2.7 billion for the fiscal year that ended Sept. 30. In 2016, the loss was $5.6 billion loss.

The loss occurred despite a double-digit increase in package delivery.

"The Postal Service continues to win e-commerce customers, grow our package delivery business and increase market share,'' Brennan said, attributing its strength in part to affordable pricing compared to rivals UPS and FedEx. "No other shipper delivers as many e-commerce packages to the home."

The heart of the financial problems plaguing the Postal Service lays squarely on the shoulders of Congress, which mandated that the organization it owns and regulates - but does not subsidize - prepay its entire pension fund.

The legislation, passed in 2006, required the Postal Service to fund 75 years' worth of retiree health benefits, a requirement that no other government or private companies practice.

The USPS office of Inspector General likens the situation to a creditor demanding that a consumer pre-pay all credit it may require for a whole lifetime.

"Well, that's what the U.S. Postal Service's requirement to prefund its long-term pension and healthcare liabilities is like," the office said on its website. " The Postal Service is required to pay the full estimate of its liabilities, currently estimated at nearly $404 billion, even as that estimate moves around and is based on assumptions that are highly uncertain and can frequently change over the life of the liability."

This year's report asked for more freedom for the Postal Service to raise stamp prices.

Valdez Star file photo

The Postal Regulatory Commission will soon issue a decision that could give the Postal Service more flexibility to raise prices beyond the rate of inflation, marking the biggest change in its pricing system in almost 50 years.

According to the Associated Press, in order to avert bankruptcy, the Post Service has defaulted on its multibillion-dollar health prepayments since 2012.

"These numbers are beyond troubling,'' said Art Sackler, manager of the Coalition for a 21st Century Postal Service, a broad trade group that includes mailers such as Amazon and the National Retail Federation. "There are 7.5 million private sector jobs that depend on the postal system, and these jobs are at risk unless Congress takes action on postal reform."

 

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