"Contributing to the agency's record $8.5 billion shortfall in fiscal year 2010 was a loss of $1.7 billion on several mail products that didn't cover costs, including advertising-mail flat packages—typically catalogs—advertising-mail parcels, and the separate category of periodicals, according to the Postal Regulatory Commission."
"The postal service said in fiscal 2010 standard mail covered nearly one and a half times its cost ... Advertising mail had higher volumes but brought in $17.3 billion, or only 26% of total revenue, due to hefty discounts and lower rates."
So only a few types of mail generate a loss, and it is a loss of $1.7B, and advertising mail generates a profit of $5.7B, yet as a whole USPS operates at a loss of $8.5B. This doesn't leave me with much faith in their self-assessment of the profitability of specific types of mail.
The USPS's profitability problems are purely political and a few process issues. [e.g. The asking people to pay their rate, rather than billing which reverses the normal method of a transaction]
This doesn't include forced money losers as well created by government controls on the USPS [e.g. rural delivery that loses money regardless of what is being delivered and the private corporations refuse to engage in it but instead hand it off to the USPS for the last mile in many cases].
The sad fact is, if the USPS had a level playing field with UPS or Fedex, it would be profitable as soon as the process changes, etc could be put in place. It isn't allowed to do that.
http://www.fool.com/investing/general/2013/03/04/how-the-pos...
"That 75-year pre-funding mandate adds substantially to the post office's losses. This is a requirement that no other government agency, let alone a private company, must face. In short, the USPS is paying for people who aren't even employees yet -- in fact, may not even be born yet!
And the USPS has been a model for prudent squirreling. As of Feb. 2012, it had more than $326 billion in assets in its retirement fund, good for covering 91% of future pension and health-care liabilities. In fact, on its pensions, the USPS is more than 100% funded, compared to 42% at the government and 80% at the average Fortune 1000 company. In health-care pre-funding, the USPS stands at 49%, which sounds not so good until you understand that the government doesn't pre-fund at all and that just 38% of Fortune 1000 companies do, at just a median 37% rate. The USPS does better than almost everyone."
Why can't they just raise rates to make postage profitable in the 'bad' categories things:
"Now, admittedly just raising postage is an overly simplistic solution, but it gets to a basic truth: lack of sales. Rates are overseen by the Postal Regulatory Commission (PRC), and prices must not rise faster than inflation. A postage stamp has increased just 12% in six years. That's another way that the USPS's mandate to operate like a business is stymied by overseers. Another major type of mail, bulk rate (ads), receives big discounts in exchange for pre-sorting mail, and could withstand higher postage, since they receive much more value than what USPS saves from pre-sorting. Fix: Allow USPS to price correctly.
...
The effects are huge -- costing USPS billions. And new services, it's estimated, could increase sales by nearly $10 billion annually, potentially covering the earnings gap. But Congress would have to agree to those changes after already tolling the USPS bell. In its latest annual report, USPS begs Congress, in the most obsequious bureaucratese possible, to let it raise revenue. The odds look slim."
Other ways they are hamstrung to generate more business:
And when USPS tried to take advantage of web shopping? As Elaine Kamarck at Harvard's Kennedy School of Government explains. "But parcel shipments were generated by large organizations and the USPS was not allowed to negotiate discounts and thus lost business. It was forbidden by law from lowering prices to get more business. This resulted in the entirely incredible situation in the 1990s where the United States government negotiated an agreement for the delivery of U.S. government package services with Fed Ex because the USPS was not allowed to negotiate for lower prices!"
My responses are directly to the comments they were in response to. So that comment was in response to:
> So only a few types of mail generate a loss, and it is a loss of $1.7B, and advertising mail generates a profit of $5.7B, yet as a whole USPS operates at a loss of $8.5B. This doesn't leave me with much faith in their self-assessment of the profitability of specific types of mail.
Because you switched from 'is X subsidized' to 'well...if X is profitable, it must be because they cannot perform accurate accounting'.
They are both profitable categories of mail and neither are 'subsidized'. The 'subsidized categories' are those that are losing money.
"The postal service said in fiscal 2010 standard mail covered nearly one and a half times its cost ... Advertising mail had higher volumes but brought in $17.3 billion, or only 26% of total revenue, due to hefty discounts and lower rates."
So only a few types of mail generate a loss, and it is a loss of $1.7B, and advertising mail generates a profit of $5.7B, yet as a whole USPS operates at a loss of $8.5B. This doesn't leave me with much faith in their self-assessment of the profitability of specific types of mail.