The Death of Snail Mail
Source: http://feedproxy.google.com/~r/ContrarianProfits/~3/q0dZfGuoCHA/19550Posted on Thursday, July 30th, 2009 | In Economics, Market Commentary
The U.S. Postal Service is on track for a record $7 billion deficit this year. That’s more than double last year’s loss.
Postmaster General John Potter bumped up his previous projection by a billion bucks yesterday, citing the growing expenses of six-day delivery and employee retirement/health care plans. Potter and his team are scrambling to cut costs left and right — from a yearlong hiring freeze to early retirement offers to branch closures. But we wonder… will it even matter?
The Government Accountability Office recently labeled the USPS a “high risk” federal program, and while we’re hard-pressed to think of any risk-free government program, we’re inclined to agree.
The Postal Service is facing a perfect storm of business risk: The business is already loaded up with debt. Minimum wage and benefit costs are rising while revenues are plummeting. For example, they are expected to handle at least 27 million fewer pieces of mail this year than in 2008. Is there any business in America that isn’t looking to cut shipping costs? (There’s this new technology we’ve heard about called “e-mail.”)
Then there’s UPS and FedEx (NYSE:FDX), two worthy private-sector rivals. And what about Peak Oil? A summer of 2008 redux could cripple the whole industry. Above all, the USPS is run by the government… c’mon.
Snail mail might not be dead, but we suspect the USPS is going the way of Amtrak, at best.
They can’t even deliver our mail without losing money, yet the public looks to the government to manage our health care? Oy…
Source: The Death of Snail Mail
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America, contrarian profits, Economics, Fedex, Government Accountability Office, John Potter;, Market Commentary, Postmaster General, U.S. Postal Service, Ups, USD
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