A recent report from the Postal Service’s inspector general is more evidence that the agency must find new strategies in order to survive, and Congress must allow it to do so by allowing it to run more like the businesses it competes against. Otherwise, the Postal Service as we know it is headed down the road to oblivion.
The report found that since 2001, private companies such as FedEx and the United Parcel Service had consistently captured 98 percent of the business from long-term shipping contracts with the government. The reason? The Postal Service did not have a sales staff or a strategy for the federal sector until 2009.
This missed opportunity resulted in a comparably small loss of about $34 million in potential revenue over the last two years. But when considering the Postal Service had a net loss of $15.9 billion – with a “b” – last year, then it is plain that the agency cannot afford to miss out on any opportunities.
Moreover, there are reports that the Postal Service, which is up against its legal borrowing limit and defaulted twice on required payments to the federal government, could run out of money by October. This beleaguered American icon continues to be weighed down, in particular, by the perplexing requirement passed by Congress in 2006 that the agency set aside $5.5 billion each year for a decade to pay for retiree health benefits for the next 75 years. The agency – and no other in government – is saddled with this commitment to pay for workers who aren’t even born. Congress must reverse this ill-thought decision.
The Postal Service has also had to overpay into its pension fund, by $50 billion according to one government report and by $75 billion by another estimate.
This is before getting to today’s realities of increased electronic communications for businesses and residents. The ease and convenience of online business transactions and email, Facebook, Twitter and a host of other e-communications have cut deeply into the Postal Service’s base.
Steps the agency has taken or simply proposed to reverse the hemorrhaging haven’t been well-conceived. The shuttering of facilities across the country, including the near-closing of the William Street mail processing center in Buffalo and the loss of its 700 jobs, brought protests and a call by Rep. Brian Higgins, D-Buffalo, for Postmaster General Patrick R. Donahoe’s ouster. The William Street center was saved for three years and possibly longer, but with no guarantees.
The Postal Service has cast about in apparent desperation looking for a viable business model. Its Board of Governors recently raised the pressure by directing the agency to speed up cost-cutting and revenue-enhancing measures. But hasty proposals could backfire.
Some members in Congress introduced several bills to improve matters, but legislation to restructure the system has been stalled.
Few would dispute the fact that even with advances in technology, the Postal Service remains necessary. Congress must act now to keep the system viable.