UPS Rate Increase Could Help Priority Mail

United Parcel Service  announced a 4.9% net increase (i.e. rate  increase minus decrease in fuel surcharge) in rates today.  Logistics Management reports on some of the details that suggests that UPS rate changes could provide the Postal Service could increase its competitive advantage in delivering small light-weight parcels or give it more room to raise rates on parcels weighing less than five pounds.  These details include: UPS is raising minimum charges by 6.2%.  The minimum charge is what shippers pay even when their contracts have significant discounts.   UPS minimum charges affect shipments that weigh less than 2 pounds, a market that the Postal Service has the largest market share. UPS’s highest increase is for [...] Read more »

Prepaid Stamps, Meters and Changing Customer Purchasing Behavior

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The recent discussion regarding Forever stamps raised the question as to how large they are and how they are changing.   The Postal Service has four pre-paid postage options for customers.  They are: Forever stamps, non-forever stamps, meters, and other which is mostly precanceled stamps  The table on the right lists pre-paid postage options and the dollar value of postage for each type held by the public in 2010 and 2011. The most striking change from 2010 to 2011 is the increase in prepaid Forever Stamp Postage.  The three factors that explain the change are: an $170 million adjustment to the methodology for calculating Forever Stamp pre-paid postage; The switch of commemorative [...] Read more »

Don’t Worry About Forever Stamps in Bankruptcy

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In a recent post, Dead Tree Edition raised the question, “Could Forever Stamps Become Worthless?”  While it is theoretically possible, that an unsecured obligation like a Forever Stamp would become worthless, this would only occur if the Postal Service was liquidated.  Liquidation of the Postal Service is not in the interest of secured creditors nor is it, as he notes, politically feasible. Dead Tree Edition provides examples of retailers whose bankruptcies voided gift cards.   However, in almost all cases the bankruptcies that voided pre-paid gift cards were liquidations.   Bankruptcy restructurings that maintained the enterprise as a going concern rarely, if ever, voided pre-paid gift cards and other services. Why Forever Stamps Are Safe Regardless [...] Read more »

Mailhandlers Extention of Bargaining Reflects Uncertainty of Postal Reform


The Mailhandlers Union has announced that negotiations with the Postal Service  will continue through at least December 7.   The continuation of negotiations past the initial deadline of November 20, 2011 gives the two parties the opportunity to develop an agreement under rules established by current law.   The extension is in the interest of the Mailhandlers Union, due to the real possibility that postal reform legislation could create less favorable legislative guidelines for the arbitrator. Both the Postal Service and the Mailhandlers Union negotiators know that the final settlement will follow the outline of the American Postal Workers Union agreement.   The agreement will likely have the following elements: the introduction of non-traditional, full-time assignments; [...] Read more »

What Killed the Postal Service? PAEA Looks Suspiciously Guilty

Real Operating Costs per Piece of Mail

While it has long been clear that the Postal Accountability and Enhancement Act (PAEA) had an adverse impact on Postal Service finances, the size of that impact was never clear to me until I took a close look at a chart in a the paper, Reforms for a Failing Postal Service that R. Richard Geddes gave at the American Enterprise Institute. The chart illustrates the real (inflation adjusted) cost per piece of mail. The chart illustrates that the real cost per piece was flat between 1985 and 2006 and then rose dramatically following passage of the PAEA. PAEA added a significant new cost burden by requiring the Postal Service pay [...] Read more »

Dr. Joe Webb – What USPS Business Model Would Best Ensure Customer Retention


Dr. Joe Webb, Director of WhatTheyThink’s Economics and Research Center, has a new post that illustrates why keeping the Postal Service under any type of governmental model is bad for customers.  He suggests that customers would do much better if half of the Postal Service was owned by its employees.   Dr. Webb’s thoughts were buried in a post that covers many topics, so it has not been widely-read by mailers or the postal policy community.   Here it is in its entirety: The USPS is looking for another rate increase, an emergency increase, beyond the inflation rate. This is, of course, the wrong inflation rate that they are comparing themselves against. They should be looking at the [...] Read more »

Restructuring the Postal Service – A Prepackaged Bankruptcy Filing


In its story on the Postal Service’s $14.1 billion projected losses for 2012, Bloomberg Business Week provided more detail on the background on the three firms that the Postal Service has talked to regarding restructuring options.    The three firms;  Moelis & Co., Rothschild and Perella Weinberg Partners LP, all have been employed by U.S. and international governments in a number of turnaround situations in recent years. Rothschild advised the U.S. Treasury Department on General Motors and Chrysler, and Moelis worked with the Dubai government on the $24.9 billion debt restructuring of Dubai World that was completed last year. Perella Weinberg is advising the U.S. government on restructuring Ally Financial Inc., which is majority-owned by Treasury. The [...] Read more »

Should Postal Employees Delay Retirement?

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In a recent post, former APWU President William Burrus suggested that members consider delaying retirement.   His advice assumes that the Postal Service will offer retirement incentives to retire next year.   His advice raises a number of questions. What is the likelihood that legislation will pass this year that will provide the Postal Service funds to provide retirement incentives or allow the Postal Service to add service time for calculating CSRS or FERS pensions? While retirement incentives exist in both the bills in line for consideration on the House and Senate, there is no indication that either chamber will act on postal reform legislation before the end of the year.   There [...] Read more »

Negotiating Early Retirement Incentives

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If the Postal Service as expected is given funding to offer early retirement incentives for postal employees, the respective unions and management associations will want to ensure that ensure that the process is as fair and generous as possible.  There are some obvious concerns that the leadership should consider. When should the the separation date be? Eric Zurndorfer has written an article in My Federal Retirement that lays out the criteria for picking an optimal separation date. Basically he concludes the following:  Separation dates ideally should be the last day of a pay period. – This maximizes the lump sum annual leave payment. CSRS must retire by the 3rd day [...] Read more »

Postal Service Developing an Innovative Parcel Service With Walmart


In an article on WalMart’s challenges in competing with, Advertising Age reports that the Postal Service is currently working with WalMart to deliver on-line purchases in rural areas.  The pilot program fills orders to rural Nevada from the stock of a Nevada Walmart with the Postal Service performing the delivery. The pilot program illustrates one way that WalMart is trying to integrate its brick-and-mortar and Internet based sales strategy.   The pilot program is designed to serve rural customers that find WalMart’s in-store pick-up option inconvenient because the store is 20 or more miles from where they live.  For these customers, WalMart fills the order at a Walmart store close to the [...] Read more »