Postal Rates Rise, Mail Volume Drops, Routes Drop

The USPS, which lost $2.8 billion last year, announced February 10, 2009 that the price of a first-class stamp will increase 2 cents to 44 cents on May 11, 2009.

If current revenue and volume trends continue, the Postal Service could experience a year-end net loss significantly higher than last year’s $2.8 billion loss. The Postal Service is a reflection of the economy in general. Retail sales, employment and investment spending are all significant indicators of mail demand. All three of these indicators are projected to decrease significantly in 2009.

“We are taking bold steps to cut costs immediately. At the same time, we are examining, realigning and streamlining our business to address longer-term financial pressures while continuing to provide high levels of service to the America public,” according to Postmaster General John Potter told the Governors. These steps include:

    Eliminating $5.9 billion in costs through fiscal year 2010, including the reduction of 100 million workhours this year, doubling last year’s efforts. In quarter one, almost 27 million workhours were reduced compared to the same period last year. Other cost-containment efforts include freezing the salaries of all Postal Service officers and executives at 2008 pay levels, reducing travel budgets, and halting all construction of new postal facilities.

    Requesting Congress to provide legislative assistance by adjusting a portion of the payment requirements of more than $7 billion a year for retiree health benefits (no tax subsidy is requested) and by providing the Board with the authority to adjust the number of delivery days, if necessary, based on mail volume.
    Working with the National Association of Letter Carriers to implement a new process to evaluate and adjust delivery routes to help achieve workhour reduction targets.

    Maximizing operational efficiency by pursuing efforts to consolidate some excess capacity in mail processing and transportation networks while protecting service.

    Reducing employee complement through attrition and voluntary early retirement. The number of career employees at the end of the first quarter was down by 24,240 compared to the same time a year ago.
    Introducing new products and offering price and volume incentives to consumers and businesses. Last year’s creation of a new Mailing and Shipping Service division is also helping to bring new products to market more quickly and effectively

Mail volume in the United States declined by a record 9.5 billion items last year. If your mail is brought to your mailbox much later than previous times, your likely experiencing the result of a drop in the number of routes and associated re-scheduling of the new routes.

Attempts at fraud using the postal service are also up. According to the National Consumers League, losses from one type of mail fraud alone – fraudulent schemes – quadrupled in three years. Each victim of this type of scam loses an average of $4,000.

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