11/23/2009

USPS: On the Brink of Bankruptcy


Last week the U. S. Postal Service announced [article link] it had lost $3.8 billion over the last fiscal year. Combine a terrible economy, higher gas prices and 26 billion fewer pieces of mail, it is no wonder the quasi-federal agency is on the brink of going completely broke. Making matters worse, for USPS, they are only allowed to borrow 3 billion a year from the federal government to make ends meet. The USPS stopped accepting taxpayer money in 1981. Since that time, it has relied on sales of stamps, money orders, overnight mail and other products. The article indicates the USPS expects to lose even more mail and deeper losses as a result. It appears this will spell the doom of USPS.

There are a lot of causes for the problems USPS currently must suffer. They are required by federal law to deliver to every mailing address in the United States. A lot of these small towns are not profitable for USPS to do so. It is a burden they must carry. But, for a lot of these small towns, this is the only lifeline they have to the outside world. Still, something will have to be done in order to try and save USPS. There is talk of ending Saturday delivery. That means mail will backup for two days every week. That also means they will have to pay overtime to get the mail out. It is a vicious cycle. Basically, the USPS is a 19th century relic trying to keep pace in a 21st century economy. It simply isn't going to work. I'm not sure what they can do to save USPS. There may be a solution where the USPS is watered down to where it concentrates on high density, mail volume areas of the country. But, I think privatization is just around the corner. The question, however, what company is willing to bid on a service that is virtually going extinct? I seriously doubt FedEx or UPS will have any interest.




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