Friday, May 25, 2012

Postal Going?

Continuing heavy losses weaken USPS, strengthen 'FedUps' cartel.

The Post Office keeps delivering bad news.

The carrier that everyone loves to hate, but that will still pick up a letter from your farm in rural Alabama and deliver it to your sister in Hawaii for 45 cents, is losing money hand over fist. The USPS lost $3.2 billion in the first quarter of 2012, and is on track to lose $14 billion for the year, mostly from a requirement it pre-fund health benefits for future retirees.

With ever-growing electronic communications devastating revenue from first class mail, and the commercial package duopoly of FedEx and UPS siphoning off parcel deliveries, future prospects look shaky for the quasi-governmental USPS.

When the Postal Service’s governors attempt to implement cost-cutting measures, they run into a wall of opposition in Congress. The USPS has backed off from a plan to close 3,700 rural post offices, and even the closure of 252 mail-processing facilities has been put on hold. And their own regulations can keep them from having a chance at profitable revenue streams.

The Postal Service has decided to “prohibit iPads, Kindles, smartphones and other electronics with lithium batteries from being mailed to overseas troops or foreign customers,” forcing shippers to use private parcel services, as the batteries “can explode or catch fire in certain situations,” says the USPS. Manufacturers such as Apple and Amazon ship their products with a minimal charge to alleviate the risk, reported Fast Company, but for this multi-billion dollar business segment, “USPS just took itself out of the game.”

As the USPS gets weaker, the FedUps cartel grows stronger, and uncertainty over future postal services puts a monkey wrench into long-range supply chain planning. It’s in every shipper’s interests that the Postal Service doesn’t get “stamped out.”

Kirk Shearer
800-989-0054 x103

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