The Postal Service announced Thursday that it lost $1.9 billion in the six months that ended March 31. Revenues dropped 1.4 percent vs. the same period in 2009 and mail volume dropped 6.3 percent. USPS reported that 88.1 billion pieces of mail were delivered in the first six months of the current fiscal year and that includes a $180 million boost in first-class mail from the Census Bureau.
To regain viability USPS is seeking congressional approval to eliminate Saturday mail delivery and for relief from an annual payment of more than $5 billion for retiree health benefits.
In April, the Government Accountability Office agreed, reporting that the post office’s business model “is not viable due to USPS’s inability to reduce costs sufficiently in response to continuing mail volume and revenue declines. Given its financial problems and outlook, USPS cannot support its current level of service and operations.”
In addition, according to the GAO the post office is nearing its $15 billion borrowing limit mandated by the U.S. Treasury and has unfunded pension and retiree health obligations and other liabilities of about $90 billion. Without an overhaul, “risks of larger USPS losses, rate increases and taxpayer subsidies will increase.”
This situation is really bad for us merchants that are currently dependent on the USPS for deliver service. With many companies constantly vying for merchant customers to use USPS services and discounted rates, should we be concerned? How much longer can the USPS sustain these losses without passing off cost to shippers or even worse, reducing service levels?
Wow, considering shipping is 1/2 of your scoring factor for eBay’s Top Rated Seller program, I really think it is important for us merchants to weigh the long term risks for our business models. If you are dependent on USPS, where does your model churn if cost skyrocket or service declines in this “DSR-Customer Feedback” driven society on multi channel platforms?!?