Posts Tagged ‘U.S. Postal Service Bankrupt’
The Mail Must go through……..if they can pay for it
Neither snow, nor rain, nor heat, nor gloom of night stays these courageous couriers from the swift completion of their appointed rounds. Or so goes the credo of the U.S. Postal service but growing losses and a huge pension and healthcare liability may be the disaster that eventually stops the mail going through.
There are over 31,000 post offices in the U.S. that were largely built to service a time when there was no phones, no emails and no facebook. In 2010 they reported a record loss of $8.5 billion and a loss of $329 million in the first quarter of 2011 and this is before they are required to make a $5.5 billion downpayment to fund the healthcare and retirement benefits of their former and current worforce. If they in fact are required to make this payment they will be technically insolvent and facing bankruptcy. In fact last year the Government Accounting Office reported that their business model is “not viable”.
Reforms don’t come easy in the U.S. but facing a growing crisis legislators are porpsoing measures to downsize their giant network, reduce deliveries (they currently deliver on Saturdays) and requiring arbitrators in labor disputes to take the services financial condition into account before settling them.
They can also look to the German model where Deutshe post was privatised and recognising the writing on the wall purchased DHL and proceeded to expand and build this business into a worldwide logistics giant run in conjunction with their domestic postal service. The result was a sucessful business that in 2010 reported a profit of $2.5 billion euros, a signifiacntly better position than the U.S. currently finds itself.