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Thoughts on the Value of Retirement Incentives

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The following is a guest commentary of a knowledgeable observer on Postal Service issues who posts comments on this blog under the name Old Postal Hand. It clarifies some points on the early retirement incentives and provides some insights into how rational Postal Service employees will likely evaluate what will be offered. His conclusion is clear. The incentives are unlikely to cause employees under 55 to retire, even if they have 30 years of service. Furthermore, he concludes that these incentives may require some form of a stick (i.e. RIF) to be effective. Old Postal Hand’s Thoughts on Retirement Incentives I  suspect that one of the reasons they were willing to offer additional [...] Read more »

Did Issa Provide an Entry for Postal Reform?

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According to Politico, Congressman Darrell Issa sent letters to more than 150 trade associations, companies and think tanks last month requesting a list of existing and proposed regulations that would harm job growth.   Postal regulations should be included on this list as Postal regulations and law affect nearly 8.5 million jobs in the United States with over 90% of all jobs in the private sector. This effort now is critical as it does not appear that Congressman Issa has included postal issues among his top priorities for investigations as the new Congress convenes.  The Washington Post summarized his agenda as follows: SOURCE: Staff reports | The Washington Post – Jan. [...] Read more »

Senator Carper’s Bill: D.O.A

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Senator Tom Carper introduced a new postal bill, the ‘‘Postal Operations Sustainment and Transformation Act of 2010’’ (The POST Act of 2010), to modify the Postal Service’s business model on September 23rd.   The bill includes all of the legislative changes that the Postal Service requested as part of its action plan last March.  The strong support that Postmaster General Potter shows for the bill in the press release from Senator Carper’s office confirms that this bill can be thought of as the “Postal Service’s bill.” Unfortunately for Postmaster General Potter, Senator Carper’s bill is effectively dead on arrival.  Why? The bill was introduced at the end of the legislative session.    [...] Read more »

The Definition of the Postal Market

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In its most recent post, Hellmail announced an upcoming shift in its direction.  Until now, Hellmail has focused on providing news and commentary on Royal Mail and its competitors in Great Britain and to a lesser extent postal operators and technology throughout Europe.  In early 2011, Hellmail “will see the expansion of what it does and the areas it covers.   … Whilst ‘post’ will remain a central theme, this blurring of communications will be reflected in its output with a broader coverage on EU regulation, World communications, new markets and products.“ What does this change mean for how postal markets are defined? The market includes both national posts and [...] Read more »

Why the Exigent Rate Case Should Not be Approved

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I have tried to avoid commenting on the exigent rate case up till now.   I have long held that the Postal Service can no longer hold accounting break-even as the standard for financial self-sufficiency.  Over a year ago I wrote that financial self sufficiency requires an operating margin of 10 to 15 percent and until the Postal Service manages its business with that goal in mind it will be in a continuing state of crisis. In addition, I have written that the decline in First Class mail, and in particular single-piece First Class mail will impose significant costs on the Postal Service for shrinking its workforce and network that should [...] Read more »

What does Warren Buffett know about the future of the USPS?

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In his quarterly filing of investment holdings, Warren Buffett announced a new investment by Berkshire Hathaway in a competitor to the Postal Service.  That competitor is Fiserv. (FISV)   With this investment, Berkshire Hathaway becomes the 6th largest investor in the company. Fiserv is not a household name . However, many of the services that it now offers were originally developed by a company called Checkfree that it purchased a number of years ago.   Fiserv has expanded those services and has continued to see its volume and revenue grow as consumers shift away from payments by mail.   Fiserv’s clients include a full range of companies that send bills and receive payments [...] Read more »

Privatizing the Post

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In the United States, the policy debate is over how the Postal Service will survive past the end of the fiscal year.   In Great Britain and Canada the debate is now respectfully when and if the Post should be privatized. Royal Mail clearly is on a path toward privatization. In July, Sky News reported the government hired advisers on a potential Royal Mail sale. More recently, Royal Mail hired Moya Green, former CEO of Canada Post who the Times (London) steered the “organization to a trebling of its net profit to C$281 million (£183 million), despite a 5.1 per cent drop in revenue.“  Ms. Greene also served as “Assistant Deputy [...] Read more »

Could a retail slowdown help mail advertising?

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Today a number of stories illustrated the weakness in the consumer economy. The Associated Press reported that consumer spending in July, the traditional beginning of the back to school season continued to decline in items other that food, gasoline, and automobiles.   is resulting in a below expectations back-to-school season “Sales were down 1 percent at department stores and also dropped at specialty clothing stores, furniture stores, hardware stores and appliance stores.” Bloomberg reported Both J.C Penney’s and Kohl’s, department stores that cater to a broad cross-section of American consumers both reduced guidance in the third quarter. (July-though September) “J.C. Penney is counting on consumers doing their back-to-school shopping later [...] Read more »

Is the Postal Service facing "bankruptcy?"

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In a recent article D. Volt highlights Postal Service Chief Financial Officer’s near term and long term liquidity problems.   Mr. Volt’s analysis is correct that the Postal Service’s inability to cover its near and long term cash obligations is a serious problem. He is incorrect in his analysis that the Postal Service’s liquidity situation does not put it at risk of being “bankrupt.” In order to understand why ” may be appropriate for describing the Postal Service’s current financial situation, one need only compare the liquidity of two other firms that have gone through major restructuring processes recently These are General Motors and YRC Corporation, a large unionized less-than-truckload trucking [...] Read more »

Consolidating Delivery Units

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The Postal Service has announced that it is considering consolidating delivery operations into fewer locations in the Syracuse area.  The consolidation of delivery operations has received little attention in discussion of streamlining the Postal Service network but may be as important to mailers that drop-ship and the competitiveness of the Postal Service’s parcel services.   Consolidating delivery operations increases the number of delivery points served by a single delivery office.   This reduces the cost of companies drop-shipping mail by reducing the number of stops that they would have to make to serve the delivery points prior to consolidation.   By reducing the number of stops, the consolidation increases the likelihood that dropping [...] Read more »