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.