Uh, oh: The Postal Service will only have five days’ worth of cash-on-hand in October

posted at 6:01 pm on August 14, 2013 by Erika Johnsen

The relevant unions and their progressive Congressional allies have been steadfastly resisting the repeated attempts at substantive reform of the U.S. Postal Service, from both within and without the longstanding institution — never mind that the quasi- agency is has been careening ever-deeper into debt and is approaching a potential insolvency- and/or bailout-scenario with every passing business day. In the latest twist of poor financial news for the quasi-governmental agency is running dangerously low on cash reserves, via WaPo:

The U.S. Postal Service anticipates having only five days of operating cash on hand after making its annual workers’ compensation payment in October, leaving the agency with slim reserves in the event of an unforeseen downturn.

“This is a dangerously low level of cash,” said USPS Chief Financial Officer Joseph Corbett during a teleconference with reporters on Monday. “We do not have a sufficient cash cushion to run a business the size of the Postal Service.”

USPS spokesman David Partenheimer clarified Tuesday that the agency should be able to survive with a five-day reserve until the first quarter, when revenues for the agency typically begin to increase. “But no business should have to operate that way,” he added.

Oh, my. I suspect there’s some outrage-mongering defense strategery in the near future from some very unhappy unions as the USPS’s financial problems are further realized.

One of the Postal Service’s underlying problems, of course, is that some of their once ubiquitous services are becoming more and more obsolete, and they aren’t too keen on readjusting their workforce. Quasi-governmental and unionized agencies, apparently, are somehow allowed to make those choices not permitted in a freer market — but somewhat encouragingly, the Postal Service has announced that they’re immediately implementing some innovations that they hope will actually step up their game and appeal to consumers on par with their other competitors. Gasp. ABC reports:

The United States Postal Service is improving service to take on package rivals like FedEx, generating an additional $500 million annually, as part of longstanding efforts to stabilize their finances.

Effective immediately the mail carrier will be offering free online tracking and free insurance for their Priority Mail shipping, matching the standard services of UPS and FedEx. Priority Mail parcels will be offered a standard $50 insurance, which can be upgraded on request. The USPS will also tell customers the exact day on which to expect a package — up to three days from ship. Previously the carrier would only offer a range of dates.

It will not affect pricing for package delivery, which remains unchanged. The changes also include cosmetic tweaks to its shipping containers and folds the premium Express Mail offering into Priority Mail.

Postal Service officials are calling this “refresh” of their product line one of their most important changes in three decades and expect it to yield an additional $500 million in revenue annually for the troubled agency. Today’s announcement comes two days after the carrier admitted it had suffered $3.9 billion in year-to-date losses by the end of the third quarter and would hold just five days worth of cash on hand in October.

It’s not a solution, but it’s a step in the right direction for revamping their broken business model.


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Comments

Taking a picture of every piece of mail will eat up a lot of money.

beatcanvas on August 14, 2013 at 6:11 PM

No sweat. Bernanke can always “print” more.

Billions here. Billions there. It’s just paper except to the serfs.

viking01 on August 14, 2013 at 6:12 PM

“We do not have a sufficient cash cushion to run a business the size of the Postal Service.”

When did it become “United States Postal Service, Inc”?

BobMbx on August 14, 2013 at 6:13 PM

A package was sent to me via first class mail from New Mexico on Saturday.
I’ll check the mail this evening, but I won’t be surprised if it hasn’t arrived.

MichaelGabriel on August 14, 2013 at 6:14 PM

Just give them more money. If you’re against that, then you want a Post Office shutdown!!!

/Mitch McConnell

besser tot als rot on August 14, 2013 at 6:15 PM

The good news is that they still have enough money to keep running those t.v. commercials claiming that they don’t depend on taxpayers for one red cent.

AZCoyote on August 14, 2013 at 6:18 PM

A lot of Postal Employees are going to be disappointed come Christmas.

Bmore on August 14, 2013 at 6:19 PM

They’re too big to fail.

viking01 on August 14, 2013 at 6:23 PM

I have always wondered why it takes 3 people to keep one person on the front counter at exactly only one place I ever go. I almost fall over when I walk in and see two windows manned at once. But that couldn’t possibly be the problem with the Post Office. /sarc

Mini-14 on August 14, 2013 at 6:29 PM

Why not just eliminate the post office and let the free market fill the void? UPS, FedEX, and DHL are doing just fine…..

nazo311 on August 14, 2013 at 6:29 PM

Another UNION success story.

Pork-Chop on August 14, 2013 at 6:38 PM

In 2011, the UK passed a law that permits the privatisation of the mails. Of course, no one has received a letter through the post since ‘cuz even the fear of privatisation has caused anarchy.

Oh wait…

Resist We Much on August 14, 2013 at 6:38 PM

Five days of “cash”?

You mean those “Federal Reserve Note” thingies?

It’s all a scam anyway.

Teat up America! The federal sow is laid over and ready to suckle!!!

Government unions, Pension plans for Teachers, postal workers, Congressional staffers, retired politicians looking for their next gig, Illegal alien “Dreamers”, come on little piggies!!!

PappyD61 on August 14, 2013 at 6:41 PM

Let the postal service go to one day a week delivery. No one would care. Really.

thuja on August 14, 2013 at 6:41 PM

Does USPS file a Fed income tax or pay any form of tax?

mjbrooks3 on August 14, 2013 at 6:42 PM

I’m running low on stamps…
If it will help you guys out, I’ll buy a few more between now and then.

Or a better solution, that will make the USPS a fortune:

Charge the junk mailers and the money beggers the same price that regular people pay!

LegendHasIt on August 14, 2013 at 6:50 PM

Raise rates through the roof.

Yes, this will significantly cut the amount of mail. Ok, so then sharply cut the amount of employees and equipment, and buildings. Voila, a handsome profit!

But some will say…. that’s not the purpose of the post office. I see, it’s to pay the cushy wages and pensions of a bunch of derriere sitters.

anotherJoe on August 14, 2013 at 7:03 PM

In order to improve employee morale the USPS had issued a directive that postal workers will get to keep valuable packages rather than deliver them.

viking01 on August 14, 2013 at 7:06 PM

So what?

bgibbs1000 on August 14, 2013 at 7:14 PM

So what?

bgibbs1000 on August 14, 2013 at 7:14 PM

Thread winnah!

Oh, and jack the rates. All of them, especially bulk mail. Big time.

SomeCallMeJohn on August 14, 2013 at 7:38 PM

The company I work for does a large amount of direct mail. Recently, we came up with a new envelope design that our local post office rejected. It was then sent back by 2 other offices who refused to make a decision and is now in New York awaiting their decision. Our local post office admitted there wasn’t anything really wrong with the envelope but it hadn’t ever been done before. Basically, no one wants to be the person to set precedent on a freaking direct mail envelope. No one should wonder why USPS is such a cluster frak.

KateNE on August 14, 2013 at 7:42 PM

They can offer free insurance and exact dates all they want, but the bottom line is the service you get at the post office compared to a UPS store for example. I worked at the UPS customer counter during college. The only time it got backed up was Christmas and even then we got compliments from customers on how well we were handling the load. At my local post office, every single day is like a UPS day at Christmas and those workers do not get in a hurry for anything. That will be their undoing. Congress should take the USPS out back of the barn and do what needs to be done.

Kafir on August 14, 2013 at 7:42 PM

Tired of it. Privatize mail delivery.

Philly on August 14, 2013 at 8:03 PM

Forever Stamps = Detroit Municipal Bonds

tmitsss on August 14, 2013 at 8:10 PM

Why not just eliminate the post office and let the free market fill the void? UPS, FedEX, and DHL are doing just fine…..

nazo311 on August 14, 2013 at 6:29 PM

That’s simply not true. All of them are struggling to remain profitable and have engaged in many layoffs.

Dr. ZhivBlago on August 14, 2013 at 9:46 PM

That’s simply not true. All of them are struggling to remain profitable and have engaged in many layoffs.

Dr. ZhivBlago on August 14, 2013 at 9:46 PM

You lie!

UPS made $3.8 billion in profit last year and FedEx made $2.03 billion. Not exactly “struggling” to remain profitable. Meanwhile post office loses $25 million a day.

nazo311 on August 14, 2013 at 10:24 PM

Tired of it. Privatize mail delivery.

Philly on August 14, 2013 at 8:03 PM

Yes. Why is this so hard?

nazo311 on August 14, 2013 at 10:25 PM

You lie!

UPS made $3.8 billion in profit last year and FedEx made $2.03 billion. Not exactly “struggling” to remain profitable. Meanwhile post office loses $25 million a day.

nazo311 on August 14, 2013 at 10:24 PM

And you’re trying to put a halo around the heads of private businesses in order to vilify a government entity. I get it. The USPS deserves criticism, but I think that in a way you’re presenting a fallacious argument in the interest of furthering your personal agenda.

From March: Profit Down 31%, FedEx Cuts Outlook

DHL suspended U.S. domestic operations in 2008 along with 9,500 jobs, so including DHL domestic mail operations vs. USPS now is a non-argument.

UPS is struggling

Now, am I saying that USPS is more efficient than these private companies? Certainly not. But they are definitely having their problems. Doing things like cutting staff and shipping more by rail helps their bottom line. But for how long? Also, at what point will it no longer be profitable to ship items long distance?

I’m not blaming the companies. It’s the economy, stupid (LOL, not you personally).

We can’t say that the economy is in a shambles because of Obumbles, the Dems, the Communists, the too-big-too-fail criminal banks, the criminal Federal Reserve board…and say at the same time that private businesses are doing great…well, just because they are private businesses. We can’t have it both ways.

Fact of the matter is, it costs everyone including USPS more to ship stuff, and as more and more people lose their jobs and as stuff costs more, there’s just going to be less to ship.

Also, look at how banks, credit card companies keep pushing us to not receive paper statements anymore (going “green” they call it…what a sham) to save them money. More people indeed are. See your bank fees going down? See your interest rates on your credit cards lowered? Seen anything lowered since these companies have gone increasingly electronic/green? No, but their bottom line improves. But that doesn’t mean they’re better off in the long run, nor that the consumer is benefiting.

Dr. ZhivBlago on August 14, 2013 at 11:33 PM

Oh well, I suppose they should shut down then. Not a huge issue, really.

virgo on August 14, 2013 at 11:40 PM

I’d like to unsubscribe from Postal Mail, where can I do that?

Neo on August 15, 2013 at 1:24 AM

Oh well, I suppose they should shut down then. Not a huge issue, really.

virgo on August 14, 2013 at 11:40 PM

Yes it is a huge issue. The USPS serves virtually every person in the country-hundreds of millions.

This isn’t some kind of Great Society welfare thing that was designed to serve a minority.

Dr. ZhivBlago on August 15, 2013 at 2:01 AM

Cost savings: Each postal carrier to have 2 routes: Rt 1: delivery Mon-Wed-Fri, Rt2: delivery Tues-Thurs-Sat.

Result: 1/2 the postal carriers, and 1/2 the delivery trucks. Huge savings. Customers see little change in reality.

Dasher on August 15, 2013 at 9:03 AM

I would love to have a five-day cash reserve on hand. But I’ve got to pay for my family’s increased healthcare expenses, so it ain’t gonna’ happen.

unclesmrgol on August 15, 2013 at 9:38 AM

Dr. ZhivBlago on August 14, 2013 at 11:33 PM

FedEx and UPS both use the USPS for many “final mile” deliveries. Even though trucks from both have come by my house, occasionally (for small packages) the USPS is the delivery vehicle. In addition, the USPS uses Fedex for mail transport between airports.

The bottom lines of both FedEx and UPS would not look so good if they didn’t have USPS as a partner…

I think the problems with mail delivery in general are related to the economy. Mail increasingly means packages and legal documents associated with financial transactions, and said items are generally sent by businesses. In a bad economy, there’s a lowered volume of business, and hence a lowered volume of cartage by carriers.

unclesmrgol on August 15, 2013 at 9:46 AM

Another manufactured crisis. Cut them loose and let their fortunes rise and fall based on the market.

TXAction on August 15, 2013 at 11:47 AM

Dr. ZhivBlago on August 15, 2013 at 2:01 AM
This is like any other endeavor. If you can’t manage the finances, they manage you. They will have to get more money or cut back on expenses. One way cut backs are achieved is to curtail services. Temporary shutdowns might solve a short term problem.

Long term, they have to do something about their structural problems. They may need to exit key sectors – especially those already being managed by FedEx, UPS and others. It’s not written in stone that the USPS must forever do what it is doing.

virgo on August 18, 2013 at 8:01 PM