USPS Misses Huge Payment

08/01/2012 — Scott Frederick

Postal Service missed huge payment today. The USPS missed a $5.5 billion Treasury payment today, and is expected to miss another $5.6 billion payment due in September. The USPS has been desperately trying to restructure, but has been unable to maneuver due to deadlocks in Congress. Any recommendation of the USPS must be approved by Congress, but a combination of partisan bickering and the fear of rural congressmen of the impact changes will have on their constituents kept any reform from taking place so far this year.

Meanwhile First Class Mail, the core business of the USPS, continues to decline rapidly in volume. At current trends the USPS could be facing an annual deficit of $20 billion within the next five years— the situation is truly dire. Unfortunately for the USPS, the deadlock in Congress is not only slowing its restructuring efforts, but also likely actively contributing to its losses. Many of its customers are likely to take note of the uncertainty surrounding the USPS and opt to switch to FedEx or UPS. The biggest problem for the USPS is that any restructuring must both address its systemic problems, and be politically favorable to enough in Congress to pass a vote—and there may not be any solutions left where everyone comes out ahead.

While no one here at PartnerShip is rooting against the USPS, we do want our customers to know they have other small package shipping options that we can help them with at any time.

This post was supported with business intelligence from Armada Executive Intelligence.