US Postal Service Chief operating Officer Pat Donahoe sent the following letter to the Area Vice Presidents on Monday:

SUBJECT: Field Non-Bargaining Job Postings

The July financial results were as follows: Volume was 5.4 percent under plan, revenue was 3.5 percent under plan, and expenses were 2.8 percent under plan, resulting in a net loss of $216 million. Year-to-date, volume is 3.5 percent under plan, revenue is 3.5 percent under plan, and expenses are 1.4 percent under plan, resulting in a net year-to-date loss of $1.4 billion.

The net income loss and decreasing workload require a thorough review of all administrative positions. Headquarters is working with Area representatives to determine the appropriate field administrative staffing. As a result, effective immediately, all field non-bargaining position postings are frozen. Any exceptions must be approved by the Area Vice President.

The US Postal Service has cut overtime expenses by close to a billion dollars in the first three quarters of its fiscal year. Reports filed with the Postal Regulatory Commission show that the USPS reduced overtime by over 28 million hours through pay period 14, which ended on July 4. The reduction translates to $923 million in overtime savings compared with the prior year. The year to date overtime rate for bargaining unit employees stood at 8.7%, down from 11.7% in 2007. In pay period 14 alone, overtime was 6.5%, compared with 10.2% in the same period last year.

The overtime savings were partially offset by an increase in straight time hours, which were up by 1.4 million hours. That number is somewhat misleading, since it includes almost 15 million straight time hours worked by new “transitional employees”, or TEs, in the letter carrier craft. Straight time hours for career bargaining unit employees were actually down by over 13 million hours.

The average hourly cost of a transitional employee, including benefits, is $23.24, compared with $39.47 for the average full time regular carrier. The increased use of lower cost straight time hours means that while the average bargaining unit employee has seen a 3.3% increase in hourly wages over 2007, the USPS’s average cost per hour increased by just 1.1%.

Second quarter Revenue, Pieces and Weight data released by the US Postal Service this week confirmed the continuing decline in mail volume, especially first class mail. While revenue for the three month period ending March 31 was up by 3.5% from the prior year, the increase was entirely due to last year’s price hike, as total mail volume dropped by 3.3%.

First class mail was also down by 3.3%, but virtually all of the decline was in the highest priced sub-class, single piece letters, which declined by 5.8%. The average revenue per single piece was 51 cents. By contrast, first class automation presort volume remained about the same as the prior year, dropping just 0.2%. The average revenue for each automated presort piece was 34 cents.

Standard mail pieces continue to slightly outnumber first class, with about 51% of the total volume. Standard mail declined slightly less than first class, down 3% from 2007. The average piece of standard mail brought in 21 cents in revenue.

The steepest decline in volume was in the Postal Service’s highest priced product, Express Mail, which declined by 14.3%. While Express Mail is the most expensive option offered by the USPS, it now represents just 1.2% of total revenue.

Priority Mail declined by 4.3%, reflecting the softening of the overall package delivery market. Each piece of Priority was worth $6.23 in revenue. Interestingly, while the average weights of first class and standard mail pieces dropped slightly from the prior year, the average Priority Mail piece was heavier, possibly reflecting increased usage of Priority Flat rate boxes.

By Neil Roland

April 17 (Bloomberg) — The U.S. Postal Service doesn’t provide effective oversight of government-issued credit cards that are used by employees for postal-vehicle services, exposing tens of millions of dollars to waste, abuse and possible fraud, auditors said.

The federal agency failed to confirm $13.7 million in vehicle fuel purchases and maintenance and repairs in fiscal 2007, and a number of other transactions were marked as verified when they hadn’t been, a report on the Postal Service inspector general’s Web site indicates.

Many Postal Service managers lacked proper training, didn’t ensure the security of the Voyager Cards, failed to maintain current employee PIN lists and didn’t keep proper documents , according to the report, which was dated March 21 and posted today.

“While we did not identify any fraudulent Voyager Card transactions, the Postal Service sites were at greater risk of fraud, waste and abuse because required internal controls for the Voyager Card Program were not in place,” the 31-page report said.

Since January 2000, the Postal Service has had a contract with U.S. Bancorp, the sixth-biggest commercial bank in the U.S., for the cards. The agency issued about 250,000 Voyager cards in the U.S. as of 2006; last year, there were about 9.3 million Voyager card transactions, for a total of $389.3 million, the report said.

Postal Service management agreed with the findings and directed subordinates to tighten oversight of the Voyager Card program, the report said. Postal Service spokesman David Partenheimer had no immediate comment. U.S. Bancorp spokesman Steve Dale declined to comment.

The findings come as the Postal Service, a government agency required by law to set rates to cover costs, tries to cope with a possible $2 billion loss this year after a$5.1 billion deficit last year. Postmaster General Chief Executive John Potter said last month he’s trying to find ways to cut $2 billion in costs. First-class stamps will rise a penny to 42 cents on May 12.

WASHINGTON, DC — The U.S. Postal Service announced that mail volume was down 3.0 percent, or 1.7 billion pieces, for the first quarter of fiscal 2008, according to preliminary financial results presented today to the Postal Service Board of Governors.

First-Class Mail volume decreased 3.9 percent and Standard Mail decreased 2.6 percent in the quarter ending Dec. 31, 2007.

Chief Financial Officer and Executive Vice President H. Glen Walker attributed the declining mail volume to “disturbing trends” in the overall U.S. economy.

“Unfortunately, two key sectors of the economy — finance and housing — suffered a downturn in the first quarter, and they’re both heavy users of the mail,” said Postmaster General John Potter.

Net income for the first quarter is estimated at $672 million on revenue of $20.4 billion.

“Although revenue is higher than in the same quarter last year, due to the price increase last May, it is $500 million less than expected,” Potter said. “We’re working to offset the disappointing revenue with cost reductions and new strategies for growth.”

Final first-quarter financial results will be released in February.

First Quarter Service Scores

National on-time performance scores for the delivery of First-Class Mail hit all-time first-quarter highs in two of the three categories the Postal Service tracks. National overnight service was 96 percent on-time – a first for three quarters in a row. Two-day service was 93 percent on-time. Three-day performance was 88 percent, a two-point improvement over the same period last year.

“These are excellent service scores for the first quarter,” said Potter, ”especially given winter weather conditions and our busiest mailing season.”

First-Class Mail performance is measured independently by IBM Global Business Services. The process measures First-Class Mail from the time it is deposited into a collection box until it is delivered to a home or business.

Other Board Action

The Board today approved three facility projects: expansion of the processing and distribution centers in West Sacramento, CA, and Providence, RI, and the purchase and renovation of an existing building and site to serve as the Perris, CA, Delivery Distribution Center.

(This analysis is excerpted from the official USPS Financial Summary) 

July 2006 - FY 2006

Information: For the month, there were the same number of delivery days and business weekdays when compared to same period last year (SPLY). Year-to-date (YTD), there are an equal number of delivery days and business days compared to last year.

Analysis of the Financial and Operating Statements

Revenue - Pages 1, 2, 3, 4, 5 and 6

For July, Total Revenue was $26 million or 0.5% under plan, and $219 million or 4.1% above SPLY. Commercial Revenue was under plan by $24 million or 0.6% and RetailRevenue was above plan by $4 million or 0.3%. In July, Total Commercial Revenue and Retail Revenue, combined, were $221 million more than SPLY. Most of the increasein revenue to SPLY for July was reflected in Presort First Class and Package Services/Permit Imprint, Permit Imprint and Meter Postage. Combined these revenue sources were $216.6 million above SPLY.

Year-to-date, Total Revenue is $364 million or 0.6% above plan with the largest contributor being Retail Revenue at $541 million or 3.7% more than plan. Year-to-date, Total Revenue is $2.3 billion above SPLY. Primary contributors to the increase over SPLY are Permit Revenue at $1.8 billion more and Other Retail Channels Revenue at $752 million, or 36.8% more than SPLY.

Expenses - Pages 1, 2, 4, 7, 8 and 9

For July, Total Expenses were $21 million above plan. Personnel costs were $1.7 million above plan and non-personnel costs were above plan by $23.4 million or 1.9%.Compared to SPLY, this month’s Total Expenses were increased by $235 million or 4.3%. The non-personnel factors contributing to this increase over SPLY includecontract job cleaners, information technology, vehicle maintenance, and printing costs. The personnel factors contributing to this month’s increase over SPLY includeunemployment compensation and workers compensation costs.

Year-to-date, Total Expenses were $295 million or 0.5% above plan. Personnel costs are $438 million or 0.9% above plan while non-personnel expenses are $101 million or0.8% below plan. The largest contributors to the non-personnel plan underrun are Information Technology at $136 million or 32.0% below plan, Training at $19 million or32% below plan. Year-to-date, Total Expenses are $2.4 billion or 4.3% above SPLY.

Mail Volume and Revenue - Page 3

Total Mail Volume for July FY 2006 was 171 million pieces or 1.1% below same period last year. Four of the eight major mail categories posted below SPLYvolumes for the month. Standard Mail and First-Class Mail volumes combined were 163 million below their July 2005 levels.

Year-to-date, Total Mail Volume is 0.8% or 1.3 billion pieces above SPLY. The Priority Mail category experienced the most significant mail volume increase overSPLY, with a 4.9% or 36 milion piece increase.In July, Priority Mail and Package Services experienced an increase in both revenue and volume when compared to SPLY. Priority Mail’s 1.8 million piece or 2.9%increase over SPLY’s volume yielded a $29 million or 8.8% increase in revenue. Additionally, Package Service’s 3.8 million piece or 4.2% increase in SPLY volumeresulted in a $15.9 million or 10.6% increase in revenue.

Year-to-date, all eight major mail categories experienced a positive increase in revenues when compared to SPLY. Periodicals generated the smallest percentagerevenue increase of 1.0%, which equates to $17.8 million above SPLY. Priority Mail generated the highest revenue percentage increase of 9.3%, which generated$358 million over SPLY.

Capital Investments - Pages 1 and 13

Year-to-date, the Fiscal Year 2006 Capital Commitments through July 2006 are $1,178 million compared to a plan of $1,134 million. This represents a plan overrunof about $44 million.

Year-to-date, Cash Outlays are $1,935 million versus a plan of $1,804 million, representing a $131 million plan overrun.

Workhours - Pages 1, 14 and 15

Total workhours for July 2006 were 259 thousand hours or 0.2% below plan, and 466 thousand hours or 0.4% below July 2005. Although Mail Processingworkhours were 424 thousand hours, or 1.7% above plan, this month’s overrun represents a 2.4%, or 624 thousand hours underrun when compared to SPLY. July’sCustomer Service workhours were 73 thousand hours, or 0.4% below plan and 162 thousand hours or 0.9% under SPLY. Delivery Service’s actual workhours wereslightly above plan by 51 thousand hours, or 0.3%, which yielded a 0.7% increase or 348 thousand hours over SPLY.

Year-to-date, total Workhours for July 2006 were 16 million hours or 1.3% above plan and 3 million hours or 0.2% below SPLY. The most significant plan overrunslie within Mail Processing workhours where 9 million hours were utilized above plan and in Customer Services where an additional 4.3 million hours were utilizedabove plan. Overall, Mail Processing workhours were 2.8 million hours or 1.0% below SPLY; Customer Service workhours were 0.2 million hours or 0.1% belowSPLY, and Deliery Service workhours were 3.4 million hours or 0.6% above SPLY.

I almost titled this piece Why do postal employees hate their customers? You would certainly get the impression from some of the comments posted on postalnews.com, that most postal employees do indeed detest the people who pay their salaries. Now obviously you have to take comments posted anonymously online with an enormous grain of salt, but given the overwhelmingly negative comments, you’ve got to think that the attitude is pretty widespread.

I know that many of the commenters would protest that it isn’t their customers that they hate, it’s the Big Mailers. Which is one of those strange things about the postal service- when postal employees (myself included) think of the word “customer”, we think of the people we deliver to, or serve at the window, or talk to on the telephone.

Most dictionaries, though, would tell you that a customer is “one that buys goods or services”. And who buys the postal service’s goods? Just about everyone in the country. But if you look a little deeper into the revenue reports, you’ll find that of the $55 billion the USPS took in over the first three quarters, only $15.5 billion was from single piece letters, flats and cards. The vast majority of the revenue, and all of the growth came from presorted (i.e. “workshared”) first class (up 1.5%), and the various standard (don’t call it ‘junk mail’) classes (up 2%).

Single piece first class mail volume was down 2.7% from the prior year. Aunt Minnie just isn’t sending as many letters. Like it or not, our biggest customer is Advo.

So why then do so many postal employees, and union heads like Bill Burrus, seem to despise the people who are paying most of their salaries? The most obvious answer seems to be simple short-sightedness. It’s much easier to rail against plant consolidations than it is to respond with well-reasoned alternatives. Burrus might be better off looking for more lucrative buyout options than trying to protect unnecessary plants. Keeping every small plant open will win votes in the union elections, but it might not insure that the USPS is still around when it comes time for younger workers to retire.

The other problem some employees have with big mailers is the perception that they’re somehow getting a free ride- that workshare discounts go too far. Well, maybe they do- but the idea that raising prices will force the mailers to come up with their ‘fair share’ is naive, to say the least. Mailers are in business to make money, period. Raise the price, for whatever reason, and you change the equation, and to some extent, you lose business, and revenue. It doesn’t have anything to do with fairness, or right or wrong.

The bottom line is that the mailers and the postal workers need each other- they should be working together to safeguard the postal service they both depend on, rather than sniping at each other.

It’s the unions, particularly the APWU, that have the most to lose in all this. If the USPS has to keep raising prices because it can’t trim costs, advertisers will find alternatives to direct mail- there are plenty of them out there. Financial services providers will continue to up the incentives for electronic fund transfers rather than shell out more for postage. The growth in workshared and standard volume will slow, and eventually decline. Where does that leave the APWU’s members?

I don’t envy Bill Burrus- he’s in an extremely difficult position, representing the postal workers whose jobs are most at risk from modernization and automation. But demonizing the people who pay his members salaries isn’t going to do him, or them, any good.

The Lexington Institute, the far right lobbying group that periodically trots out Sam Ryan to snarl about the postal service now presents a piece by a former USPS economist claiming to explain just how the service can bring its costs under control.

Read the rest of this entry »

The US Postal Service yesterday issued financial results for February. Click here for the Adobe .pdf version of the report, or here for the same data in an Excel spreadsheet.

Revenue for the month was up by 5.4% from the prior year, which is the amount of the rate increase implemented in January. Revenue from the mail was only up by 4.4% (page 3)- the rest of the increase in income came from investment income, services and appropriations.

For the fiscal year to date, revenue is up 2.2% to the prior year. All of the increased revenue came from commercial categories- permit imprint and presort. Sales of stamps and metered postage are actually down from the prior year by about 100 million year to date. Expenses have risen by 3.9%.

Net income for the year to date is $1.3 billion. Unfortunately, $1.25 billion of that is earmarked for the so-called escrow account, and will be unavailable to the Postal Service.

Mail volume was just about flat- up by 0.2% for the month, 0.1% year to date. First class volume was down 0.9% for the month, -1.5% year to date. Standard mail was up by 0.8% for the month, 1.4% for the year to date.

Express mail and Priority continued to show strong growth, but still represent less than ten percent of total USPS revenue. Together, they account for $220 million in additional revenue so far this year.

Read on for the USPS analysis comments from the report:

Read the rest of this entry »

The NALC’s magazine, Postal Record, this month features a 4 page article on the USPS’s financial performance in FY 2005. It’s a good summation, and ends with a pointed reminder:

with the federal government awash in red ink, there are external risks. As many letter carriers recall, during the 1980s and 1990s, Congress and the White House were more than willing to cut the deficit by raiding the Postal Service “piggy bank,” despite the mandate that USPS operate as an independent entity.

One problem with the summary, though is the statement that “Bucking the downward drift of recent years, first class mail increased slightly”

Not so fast! It is true that total first class volume was up very slightly for the year- 145 million pieces to be exact. The problem is that there was only one month that showed an increase- November. Mainly because of a one time spike in credit card solicitations, volume in that month was 863 million pieces over the prior year. Do the math- outside of November, first class volume was down by over 700 million pieces. A one month spike caused by an external event (in this case a court decision) doesn’t represent a change in the trend.

Of course, regardless of the reason for the spike, I’m happy we got the extra revenue. Ummm, but it turns out we didn’t- while first class volume (adding November back in) was up by 0.1% for the year, the first class revenue we took in was down by 0.9%.

You know what they say about every silver lining having a cloud… 

Behind the Numbers: A look at USPS financial performance