Mailers taking advantage of worksharing discounts are not to blame for the U.S. Postal Service’s bleak financial future, according to Postal Rate Commission Chairman Ed Gleiman. Rather, the USPS itself is at fault for failing to cut its costs.
Speaking at the general meeting of the Parcel Shippers Association the PRC chairman said recent reports about postal finances were “troubling in that much of the blame for the revenue shortfall relative to [its] budget is being explained in terms of mailers moving their mail to discount categories that produce less revenue per piece.”
According to those reports the USPS expects to end its fiscal year in September with a $200 million deficit, the first since 1994 when it lost a total of $1.8 billion. A series of cost-cutting moves, plus two rate hikes and increased volume, helped the USPS to post profits of nearly $5 billion between 1995 and last year.
Gleiman, agreeing that mailer worksharing discounts were developed to help the USPS reduce its costs in processing mail, said if the postal service’s finances look bleak for this fiscal year “it’s because mailers are doing worksharing and/or presenting less costly mail,” and it can be concluded that “the postal service is not capturing cost savings.”
Although he did not suggest what the USPS could do to cut costs, the PRC chairman said the real problem “may be in the [postal service’s] implementation and operation of new systems in the field” that are too expensive.
Gleiman praised recent efforts by Postmaster General William J. Henderson “to get things back on an even keel by trimming [postal] headquarters’ costs.”
Those efforts include shaving $50 million from the postal service’s $300 million marketing budget and a review of its five year contracts with Young and Rubicam for media buying and creative work on Global Priority Mail; Foote Cone & Belding, for Priority Mail and stamps; Draft Worldwide for direct mail, and Frankel for employee communications and stamp collecting, which expire in Sept. 2000.
Network
