Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sun Aug 9 2020 21:00:49

Can the USPS Price Its Way Out of Its Financial Woes?

By: Ina Steiner

Sponsored Link

The President gained support of small online sellers when he advocated raising prices of postage for packages coming from China, but those same sellers may disagree with his latest thinking on shipping rates.

President Trump wants the USPS to raise prices package and shipping rates - by approximately four times, he said in April, according to the Federal News Network.

That fact that the USPS has financial woes is not in dispute, but the reasons why and what to do about it are.

The USPS reported the results of its most recent fiscal quarter on Friday. It grew revenue 3.2% ($17.6 billion). But its losses are enormous, even though it lost less in the recent quarter - $2.2 billion compared to a net loss of $2.3 billion for the same quarter last year. (The controllable loss for the quarter was $1.5 billion, compared to a controllable loss of $1.1 billion reported for the same quarter last year.)

In announcing the results, the new Postmaster General and Chief Executive Officer Louis DeJoy said, "Significant declines in our mail volumes as the result of the pandemic were largely offset by corresponding growth in our package business, but the reality remains that the Postal Service is in a financially unsustainable position absent significant fundamental change."

And he's made big changes since taking the helm of the Postal Service on June 15th. As we reported on July 12, postal workers were reporting new practices that the Letter Carriers union said "substantially" altered delivery practices and procedures - without union approval - and that some believe are causing delays in mail delivery.

DeJoy also announced a major reorganization of the Postal Service on Friday along with a management hiring freeze. Postal News called it a "Friday Night Massacre" and pointed to a Washington Post article that said 23 postal executives were reassigned or displaced.

The new Postmaster General is being scrutinized given his ties to the President, and the Washington Post pointed out that DeJoy and his wife hold between $30 million - $75 million in assets in USPS competitors or contractors.

In opening remarks at Friday's USPS Board of Governors meeting, DeJoy called on Congress to enact reform legislation that addresses the Postal Service's "unaffordable retirement payments" (he said he also wants the USPS to integrate health benefits with Medicare).

He wants the Postal Regulatory Commission to resolve the 10-year review, and a design a more rational regulatory system for mail products.

But, he said, "We will not and cannot wait for the legislative and regulatory process to save us."

And while the President has said he wants postage rate hikes, DeJoy said, "There are competitive alternatives to every product that we offer, and for that reason high-quality, reasonably-priced service is an absolute necessity."

The USPS cannot unilaterally change postage rates for dominant products (for example, the price of a stamp), but it has more leeway with changes to rates for competitive products, such as Priority Mail.

If you use the USPS to fulfill your online orders, let us know if you're seeing any slowdown in mail delivery, and if you think there's room to raise rates for the services you use.



Comments (39) | Leave Comment | Permalink

Readers Comments

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: COVID-19 This user has validated their user name.

Sun Aug 9 22:38:02 2020

This COVID excuse is a clever way for the USPS to push everyone into paying more for Priority Mail, that's all it is.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

This user has validated their user name. by: Covid-20

Sun Aug 9 23:00:14 2020

I concur with cousin Covid19

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: margo This user has validated their user name.

Mon Aug 10 00:50:17 2020

I shipped a package 2 day priority mail and it was delivered 8 days later.It was shipped from Tn to Ill.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

This user has validated their user name. by: cfrphoto

Mon Aug 10 01:03:36 2020

While registered mail is taking weeks, no buyer has complained about late delivery of Small First Class packages since last summer. The price of First Class Packages has almost doubled in the last decade. Did the new Postmaster General fail his first semester of economics? Substantially raising the price of First Class Packages and Priority mail is likely to reduce demand and shift business to FedEx or UPS. Some buyers faced with higher prices may hold onto their money. Would collapse of the US Postal Service benefit anyone other than Amazon?

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Vigilant Eye On eBay This user has validated their user name.

Mon Aug 10 01:06:19 2020

While I have not noticed any major delays in my outbound Priority Mail shipments, packages are no longer being scanned at the local post office branch that they are dropped off at.

In addition, while in transit to the addressee, there are several more stops at USPS sort centers that have never appeared before on the tracking information for previously shipped parcels that were sent to the same locations.

Not sure that a rate increase is going to fly with commercial shippers.

Because of ongoing delivery issues, one firm that I regularly do business with is now using UPS SurePost rather than USPS for its shipments.

Typically one day slower than UPS Ground, UPS SurePost is an economy residential ground service that combines the consistency and reliability of the UPS Ground network with final (aka ''Last-Mile'') delivery that is typically provided by the U.S. Postal Service.

With SurePost, UPS delivers a parcel to the recipient's nearest USPS branch and the post office typically delivers the package a day later.

Always on time, the last four orders that I have received via SurePost have arrived on a Sunday.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: thriftyattireandstuff This user has validated their user name.

Mon Aug 10 01:10:48 2020

Major slowdowns for both first class and priority, espcially anything moving outside of the East Coast (my location). Scans not being done unless you actually take the item to a postal counter and often nothing showing up in tracking until delivered. Pathetic. All this since July 15th.. Not a damn thing to do with Co-Vid... was fine until July 15th..

Also, waiting on something I ordered from Amazon. Two identical packages shipped the same day by the same vendor 1st class. One arrived Friday after first scan of July 24th..  The other, no flippin clue. Probably still sitting on a truck somewhere.  The product was air pillows. I can tell they were sitting in heat somewhere for a length of time because they are seriously deflated, so I'm imagining they just sat in a warehouse or more likely on a truck somewhere since they are probably running out of room for the backed up mail.

My theory is that they are literally not processing the overflow from the day before and working on new stuff. This seems to have been dumped on the workers with no real guidance because any postal worker I have talked to was completely unawares of these changes prior to mid-July.  That my friends, is how you run a business into the ground.  I guess that is the point of all this to begin with huh?

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: aris This user has validated their user name.

Mon Aug 10 01:28:39 2020

I sell collectibles and my buyers have patience. I only ship Media and I haven't had any complaints about late packages and I actually don't see any real difference than it was a few months ago. I know full well that sales are up for a lot of eBayers (including myself) during this pandemic and the Post Office is swamped with 'Christmas-like' amounts of packages, but I think they are doing as well as can be expected during these crazy times.
Don't even get me started on the new ignorant 'Trump-buddy' Postmaster. I despise this administration so much that I can't even think straight anymore.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Disgusted This user has validated their user name.

Mon Aug 10 01:28:59 2020

USPS needs someone that knows how to move mail directly.  Not all across the state to go across town.  Handle a package 5 times is ridiculous when it goes 10 miles away.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: BargainzBabylon This user has validated their user name.

Mon Aug 10 01:39:02 2020

"DeJoy called on Congress to enact reform legislation that addresses the Postal Service's "unaffordable retirement payments"

It's about time!!!!  Well, DeJoy, the bill to do just that passed the House in February and is sitting in the senate. Tell Moscow Mitch to get his lazy behind off of it and get it pushed through.  

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: MichaelP This user has validated their user name.

Mon Aug 10 02:08:31 2020

As others have said, local post offices are not doing an initial scan and then the package sits at a sorting center for several days before it finally gets a scan. Then they back date an initial acceptance scan by one day, complete with time and date, so that it looks like the seller shipped the item really late when in fact it was shipped on time.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Eagle This user has validated their user name.

Mon Aug 10 02:43:43 2020

Unless I'm the only vendor that has their customers track the progress online, the scan of a package once it's delivered to the post office is a major deal and scanning while in transit is just about as big of deal. I'm constantly getting emails from customers accusing us of not shipping their packages and keeping their money to ''I think it's lost and hope you bought insurance''. Like others have said, Priority is taking 6-8 days instead of the 2-3 days advertised, 1st class is taking up to 12 days instead of the 3-5 days as advertised. And don't get me started on international shipments. Had one package shipped International Priority that took 3 months to Germany. We ship a lot of orders to Australia, France, UK, Netherlands, Switzerland, and Germany. Before covid-19 and new postmaster they were taking 2 weeks on average or less and now take 2-3 months. Really hurts business and has almost cut out any 2nd time buyers. Thank God nobody has filed any chargebacks yet!

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: cvsharkey This user has validated their user name.

Mon Aug 10 05:34:35 2020

It is unfortunate that our postal system does not have the deep pockets as does Bezos to implement a completely updated system. But then again, being government connected--they'd just screw it up. Government entities don't have a good track record for upgrading technology....

Yes, tracking updates are not happening. I see latest tracking indicators listing  packages many states away for a week or more. And then it suddenly shows up at my door.

Raising postal rates will kill my company. I have no local traffic--my customers are mostly West of the Mississippi & I'm in NY. (It's the type of product I sell that controls this. Very niche market.)

It will kill much of online shopping. Consider Etsy's push for free shipping, currently picked up by the seller. Now, consider those rates going up 4X? Total death.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Chicago48 This user has validated their user name.

Mon Aug 10 05:56:47 2020

DJT won't win votes if he does this.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Tiffee Jasso This user has validated their user name.

Mon Aug 10 06:19:44 2020

"The new Postmaster General is being scrutinized given his ties to the President, and the Washington Post pointed out that DeJoy and his wife hold between $30 million - $75 million in assets in USPS competitors or contractors."
This is unacceptable as the Postmaster is in violation of Federal Law. The basic criminal conflict of interest statute, 18 U.S.C. § 208, prohibits Government employees from participating personally and substantially in official matters where they have a financial interest. Unfortunately, we have an impotent US Attorney when it comes to the law which is why he was appointed in the first place.
If the Post Office double the rates, online sales will drop significantly. Yes they will get more money per package, but the number of packages being mailed will drop by fifty percent or more as many buyers will not pay the higher rates.  

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Jono77 This user has validated their user name.

Mon Aug 10 06:22:03 2020

On June 1st 2020 USPS or Trump forced Royal Mail to increase the price of a small parcel from UK to USA from £11.35 to £18.63 Supposedly because USPS can't make a profit delivering for that price. Donald Trump and the mail companies are killing off overseas trade for small businesses. Big businesses get special rates so pay much less. Same old story. I hope Trump loses the next election. He's a highly unstable idiot just like our Idiot here in UK.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Jono77 This user has validated their user name.

Mon Aug 10 06:24:48 2020

Oh.... and I no longer post to USA because of this increase. Price to Canada has not changed so I will still post to Canada.  

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Marty2020 This user has validated their user name.

Mon Aug 10 06:50:00 2020

Very objective comments from the Trump haters. We had all these wonderful knowledgeable postmasters before who bankrupted USPS every single year.

I would like to hear YOUR solution  how to run a business that losses billions every year. You love paying almost nothing for mailing your packages via USPS and have other subsidize your postage?  Hypocrites. You don't like USPS? Use Fedex and UPS. And blame Trump for their high rates.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: FeelingFroggy This user has validated their user name.

Mon Aug 10 06:53:36 2020

We adhere to our own set of theories in our stores. If it can't be sent with a 55 cent stamp we don't sell it. So raise the rates all you want. We already charge 1.00 for shipping on everything. So raise away. WE DON'T CARE

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Cbaker This user has validated their user name.

Mon Aug 10 07:06:18 2020

I believe the mail holdup is in the local post offices. My business mail bypasses our local and goes directly to the distribution center so my mail rarely goes missing.  My carrier did say that OT has been discontinued. Some union workers may be balking at that and holding up the mail which is shameful. My personal packages have been held up due to the local PO holding the packages.

The PO has been losing millions for decades due to excess pension plans. Blaming the President for issues that have been ongoing forever is just politics and dishonest on so many levels. Concentrate  on the problem not the guy who’s trying to fix them and maybe there can be a solution.

Perminate Link for Can the USPS Price Its Way Out of Its Financial Woes?   Can the USPS Price Its Way Out of Its Financial Woes?

by: Jono77 This user has validated their user name.

Mon Aug 10 07:26:33 2020

Not sorry to upset the Trump cheerleaders. I'm against the destruction of overseas trade for small businesses. How many bankrupt businesses has Trump been involved in? Answer 6.

Click to view more comments
1 2  [Next Page]


Login is required to post comments.
To sign in to leave a comment, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.