ENCINITAS — In a late August visit to San Diego, The Postmaster General of the United States Patrick Donahoe described the situation the Postal Service is in as “very fixable,” but only through legislation.
The financial situation that has seen the Postal Service lose billions due to flattening first class mail volume with the advent of online bill paying over the past 10 years.
“We have lost about 60 percent of our single piece volume — mail in the blue mailboxes — in the past 10 years,” said Donahoe. “That equates to 30 billion pieces, and if you put it in terms of a 49-cent stamp, it’s $14.5 billion in yearly revenue that’s disappeared.”
And then there was the 2006 government mandate that required the mail service to prefund $5.5 billion a year into a retirement health benefits fund for future retirees.
The Postal Service has defaulted on making those payments in the past, and will default again this month, said Donahoe. Right now the Postal Service is on the hook for about $21 billion — with a default on this month’s payment that will make the amount they’ve defaulted on $26 billion.
But Donahoe is certain that by changing the law in integrating Medicare and requiring office personnel management to provide a lower cost health care system for retirees, something not within the powers of the Postmaster General, will fix the problems of the Postal Service.
And when asked how quickly that problem would be fixed if those changes were implemented: “Immediately,” he said.
“Our problem is a lack of legislation (that’s) left us standing there holding the bag. We need to address health care, we need to address six day to five day delivery, we need to address some pricing issues that need to be put to rest,” Donahoe said.
In terms of what happens with any legislation passing, Donahoe, who said he was probably one of the more optimistic people you’d meet, didn’t express any optimism that that would get done.
“I’ve been in this job for four years, I’ve been pressing both the House and the Senate and they don’t have anything to show for it.”
While the Postal Service continues to lose money, the latest figures released show they did see an increase in revenue during the same quarter that Donahoe credits to two things: “We raised prices this year 5.9 percent and we have a nice increase, about 7 or 8 percent increase, in package revenue.”
But Donahoe wasn’t convinced that the increase was a signal of things changing for the Postal Service, saying that every year their costs go up a minimum of $1.5 billion and even if they did nothing different, the costs will still go up.
“Because you have an increase in a million new deliveries, you have wage and health benefits that go up, even if it’s the minimum, our people get a 1 percent raise — it’s not like some big fancy raise — and health care costs, which we’re estimating will go up 5 percent, those three things will go cost $1.5 billion.”
And on top of that, he said the Postal Service is expected to lose approximately 4 billion pieces of mail next year.
High point of mail volume was in 2006 when they delivered 213 billion pieces of mail. This year, Donahoe expects to deliver about 152 billion pieces of mail.
Yet it seems the Postal Service is done with the closures of brick and mortar Post Offices. Donahoe said they’ve already reduced the retail presence, some in San Diego County, by about 2,500 facilities.
A couple of locations in North County, the Post Office in Escondido on Escondido Boulevard and the Post Office in Leucadia were slated for closure studies to determine whether those locations could be closed down.
And at this point, Donahoe said the Postal Service was more interested in raising revenues with packages and expanding into the Internet, he cited that 48 percent of their revenues comes outside of the four walls of the Postal Service the retail revenue.
A yearlong pilot program that ended on Aug.1 with Staples was described as “great,” Donahoe said.
The partnership, which included Staples stores in North County, will transition into the Postal Service’s long time Approved Shipper Program.
Today, the Postal Service is now trying to link mail in, making it more relevant to people. “And it’s working because people look at their mail every day,” Donahue said.
“The Postal Service is trying to help mailers make their mail pieces more relevant to their customers by leveraging data and analytics to give mail a personal connection,” said Eva Jackson, a spokeswoman for the Postal Service.
“If customers get something in their mailbox that they’re looking for of have some interest in, they’ll act on that. But if they get something in their mailbox that they don’t like, they’ll throw it away.”
“The Postal Service is a very critical part of the American economy in today’s world, and will also continue to be. There’s a lot of change in the digital systems and that’s good…but we’re not too much unlike (newspapers) — that people like hardcopy, they like to be able to manage hardcopy, they use us the same way as they use (newspapers) — to get to websites, and with that, combined with the package delivery, we still think there’s a nice future for the Postal Service,” Donahue said.
Deliver packages on Sundays.
Trying to innovate based on what the customers want and need, but that doesn’t mean the Postal Service will be turning to drones, like other companies as Amazon.com.
“I don’t know what’ll happen with drones,” he said. “Drones are such an interesting thing. Drones are quickly becoming an annoyance. I think there’s a lot of people who might not like a whole sky full of drones.”
Donahoe, who has been accused of wanting to privatize the Postal Service, has repeatedly stated, “there’s no interest.”
He said when you privatize the Postal Service you do that out of desperation. “There’s no other upside,” he said.
Donahoe acknowledged that other countries have privatized their mail systems (the United Kingdom, Germany, and Australia wants to), but that it’s not necessary here.
“We have plenty of volume, we have plenty of package volume and managing the costs the right way will keep for a very healthy Postal Service,” he said.