Multiple reports from sources covering the activities of the United States’ Federal government, including Federal Times and The Hill, report politicians are paying more attention to the plight of the United States Postal Service (USPS), which continues to forge ahead with massive cuts.
Lawmakers, according to Federal Times, are currently trying to limit postal-service cuts, but the USPS still plans to reduce its workforce by up to 15,000 more employees and close up to 82 more processing centres over the next year. USPS, which closed 141 processing facilities in 2012 and 2013, estimates it could save $750 million annually from its new round of planned cuts.
The Hill, meanwhile, reports Senate Majority Leader Harry Reid, a democrat from Nevada, joined the effort to block the USPS from making its next round of large-scale cuts. The Hill suggests Reid’s involvement increases the odds of a congressional debate over postal reform sometime this month.
In mid-August, USPS reported its third quarter results (ended the June 30, 2014) with a net loss of US$2 billion, compared to a net loss of US$740 million for the same period last year. The USPS has recorded a loss in 21 of the last 23 quarters — the excepted quarters being the two in which Congress rescheduled the Retiree Health Benefits prefunding payments.
Third-quarter revenue improved, according the USPS, as a result of its January mail price increase, sales and marketing initiatives, and a growing package business. Total operating revenue for the third quarter of US$16.5 billion increased by US$327 million, or two percent.
USPS’ shipping and package revenue was up 6.6 percent for the third quarter, while Standard Mail revenue was up 5.1 percent, driven by a 0.9 percent increase in volume and the January 2014 price increase. First-Class Mail volume was down 1.4 percent.
Joseph Corbett, Chief Financial Officer and Executive Vice President of the USPS, stated the organization will be unable to make the required US$5.7 billion retiree health benefit prefunding payment to the U.S. Treasury, due by September 30, 2014.
“Due to continued losses and low levels of liquidity, we’ve been extremely conservative with our capital, spending only what is deemed essential to maintain existing infrastructure,” said Corbett. “To continue to provide world-class service and remain competitive, we must invest up to $10 billion to replace our aging vehicle fleet, purchase additional package sorting equipment, and make necessary upgrades to our infrastructure.”
Federal Times article
The Hill article
The United States Postal Service (USPS) ended its first quarter of the 2014 fiscal year (October 1 to December 31, 2013) with a net loss of US$354 million. The USPS has recorded 19 losses amid its last 21 quarterly reports.
USPS stated its losses continue to mount due to the decline of higher-margin first-class mail, stifling legal mandates, and its inflexible business and governance models.
“The Postal Service is doing its part within the bounds of law to right size the organization, and I am very proud of the achievements we have made to reduce costs while significantly growing our package business,” stated Postmaster General and CEO Patrick Donahoe. “We cannot return the organization to long-term financial stability without passage of comprehensive postal reform legislation.”
Without such legislative change, USPS expects to default on another required US$5.7 billion retiree health benefits prefunding payment due by September 30, 2014, because it will have insufficient cash and no ability to borrow additional funds at that date.
In the event that circumstances leave the Postal Service with insufficient cash, the Postal Service would be required to implement contingency plans to ensure that all mail deliveries continue. These measures could require the Postal Service to prioritize payments to its employees and suppliers ahead of some payments to the federal government, as has been done in the past.
“We grew revenue by over $300 million through aggressive marketing and improving service, and we reduced operating costs by $574 million in Quarter 1, partially due to the separation of approximately 22,800 employees in 2013 under a Voluntary Early Retirement program and improved efficiency in our workforce,” stated Joseph Corbett, CFO and Executive VP, USPS.
In its 2014 first quarter, the USPS had mail volume of 42 billion pieces compared to 43.5 billion pieces in the corresponding 2013 quarter. First-Class Mail volume declined 4.6 percent; Standard Mail volume declined by 2.8 percent; and Shipping and Package volume increased 10.3 percent.
Canada Post introduces a Five-Point Action Plan in an effort to return to financial sustainability by 2019, which includes the elimination of door-to-door delivery and 6,500 to 8,000 jobs, but opens up new private-business opportunities.
The first pillar of the crown corporation’s plan is built on converting the entire nation onto a community mailbox delivery system, effectively eliminating, over the next five years, the door-delivery service still enjoyed by around one third of all Canadian households. Canada Post expects this measure alone to save $400 to $500 million per year once fully implemented, which makes up the majority of savings within its Five-Point Action Plan.
In total, again once implemented in five years, Canada’s new postal system is expected to save anywhere from $700 to $900 million per year on its bottom line, relative to the current system.
This plan comes around eight months after an April 2013 study by the Conference Board of Canada that projected Canada Post’s financial loss would reach $1 billion by 2020 unless fundamental changes were made. In its 2012 Annual Report, Canada Post reported that Canadians mailed almost one billion fewer pieces of domestic letter-mail in 2012 than they did in 2006.
Canada Post’s second pillar of the 2019 action plan is a new approach to pricing domestic letter-mail, which is presented as the second most-effective new financial measure, expected to add $160 to $200 million to the bottom line. Beginning March 31, 2013, Canada Post is to introduce a new tiered pricing structure for domestic letter-mail, with stamps costing $0.85 each when purchased in booklets or coils and $1 each when purchased individually.
As its third pillar, Canada Post plans to open up more franchise postal outlets in retail businesses across Canada, particularly within smaller communities. This franchise post office approach is expected to contribute $40 million to $50 million to the bottom line.
Canada Post will continue to operate its corporate post offices. Some Canadians will have the option of steering their Canada Post deliveries to lock boxes held within registered private businesses. The initial neighbourhoods slated for community mailbox conversion in the second half of 2014 will be announced once plans are finalized.
Streamlining operations is the term used to described Canada Post’s fourth new pillar, which aims to create a more efficient flow of parcels and mail through the network and to customers. These internal changes include technology updates, such as faster computerized sorting equipment, consolidation, such as processing mail and parcels in a central location, and running more fuel-efficient vehicles. This fourth pillar is expected to save $100 to $150 million, annually.
The fifth pillar of Canada Post’s five-year plan is to address its cost of labour, which largely relates to the four preceding initiatives. The crown corporation expects to reduce its labour force by between 6,000 and 8,000 positions. The average age among current Canada Post employees is 48 and it expects nearly 15,000 employees to retire or leave the company over the next five years.
Soon after the Conference Board of Canada’s April 2013 study, Canada Post began to consultant Canadians about the future of their mail delivery. From mid-May until September 2013, senior managers of the crown corporation travelled to 46 communities across Canada to hold such conversations. Canada Post also invited Canadians to share their views online and by writing letters. As of October 15, 868 letters had been received.
Five-point Action Plan
Consultations with Canadians
An earlier Conference Board of Canada study projects that Canada Post will lose $1 billion by 2020.
The United States Postal Service ended the second quarter of its 2013 fiscal year (to March 31) with a net loss of $1.9 billion (all figures are reported in U.S. dollars). The organization states this Q2 result highlights an urgent need for comprehensive legislation or its current business model will continue to result in large quarterly financial losses.
“To return the Postal Service to solvency requires a comprehensive approach, which is reflected in our updated five-year business plan,” said Postmaster General and CEO Patrick Donahoe. “The plan provides an achievable road map to restore financial stability and preserve affordable mail service for the American public. The major elements of the plan must be pursued and executed within a short window of opportunity.”
The Postal Service stated that it needs to save $20 billion annually by 2016 and many of the savings cannot be achieved without the following legislative action:
- Require a USPS Health Care Plan (resolves the Retiree Health Plan prepayment issue),
- Refund the FERS overpayment and adjust the FERS payment schedule,
- Adjust delivery frequency (six-day package/five-day mail delivery),
- Streamline the governance model,
- Allow USPS the authority to expand products and services,
- Require a defined contribution retirement plan for future postal employees,
- Provide instructions to arbitrators to consider USPS’s financial condition in interest arbitration awards, and
- Reform workers’ compensation.
The Postal Service has already reached its debt limit of $15 billion. It also has defaulted on $11.1 billion due for retiree health benefits in 2012 and also expects to default on an additional $5.6 billion on September 30, 2013. In addition, the Postal Service owes an estimated $17 billion on future workers’ compensation claims.
“These obligations of nearly $50 billion and continuing losses highlight the need for immediate legislative reform to give us the latitude to execute on our Five-Year Plan and improve our ability to repay these obligations and return to profitability," stated Chief Financial Officer Joe Corbett.
In the 2013 second quarter, USPS work hours were reduced by approximately 7 million hours, a 2.4 percent reduction compared to the same period last year. "Even with a 6.2 percent volume increase in Shipping and Packages compared to the same period last year, we were able to reduce these work hours to increase efficiency," Corbett added, noting that work hour reductions have been the single largest contributor to the ongoing achievement of savings targets.
The number of career employees decreased by approximately 25,000 in the second quarter and by 46,000 in the last year. The USPS now has the lowest number of career employees since 1966.
The United States Postal Service announced today it cannot continue to wait indefinitely for legislation to help it survive “an unprecedented set of financial challenges,” asking management to plan for liquidity conditions.
The Postal Service Board of Governors, citing the inability of U.S. Congress to pass comprehensive postal legislation, has been discussing accelerated cost cutting and directed management to accelerate the restructure of Postal Service operations.
The board approved specific restructuring initiatives and also instructed the USPS to revise its 2012 five-year comprehensive plan to account for current financial and liquidity conditions.
Since 2006, the Postal Service has reduced its annual cost base by approximately $15 billion and reduced the size of its career workforce by 168,000 or 24 percent.
In fiscal year 2012, the USPS defaulted on $11.1 billion in mandated payments to the U.S. Treasury, which contributed to a recorded loss of $15.9 billion.
The Postal Service continues to seek legislation to provide it with greater flexibility to control costs and generate new revenue, and is encouraging the 113th Congress to make postal reform legislation an urgent priority.
UPDATE June 27: Postal Workers are returning to work across Canada as back-to-work legislation was passed over the weekend, despite the efforts of the NDP to delay it. The Bill to return postal workers back to work passed through the House of Commons after a 58-hour marathon debate, which saw the NDP deploy filibuster tactics in an effort to allow more time for the administration and union to reach a deal.
Bill C-6 was passed by the Senate on Sunday and will officially come into effect this evening. Postal staff have already started to return to work at sorting stations. Delivery staff will resume tomorrow morning.
In the end, the legislation provides for a lower wage increase than the final offer from Canada Post. Talks broke down last Wednesday and the two parties could not reach a consensus in a meeting on Saturday.
According to the CBC, representatives from the CUPW said its members would return to work, however would continue to fight for the postal workers' rights under the "draconian" legislation.
UPDATE June 21: Canadian Postal workers remained locked out of their jobs as the strike enters its third week. Last Wednesday, Canada Post shut down urban postal operations. Pension and social security cheques are being delivered as part of a prearranged agreement between the union and Canada Post.
Back-to-work legislation will be debated at the House of Commons today. The bill will include wages that are less than the latest offer from Canada Post. Under the bill, employees will get a wage hike of 1.75 percent in 2011, 1.5 percent in 2012 and two percent in 2013 and 2014. The latest offer from Canada Post offered a 1.9 percent increase each year between 2011 and 2013, with a two percent increase in 2014. This move is to push the CUPW to settle, or get less than what was offered if they are legislated back to work.
“Imposing wage increases that are lower than Canada Post’s last offer punishes postal workers for a disruption that was caused by the corporation’s national lockout,” said CUPW National President Denis Lemelin.
The bill is not expected to pass until Thursday, from there it would still require royal assent before coming into effect.
UPDATE June 14: CUPW's rotating strike action has reached two of the largest markets today, with workers in Toronto and Montreal walking off the job for 24 hours.
Last week, due to shrinking mail volumes as a result of the strike action, Canada Post announced deliveries in urban areas will be reduced to three days a week: Mondays, Wednesdays and Fridays.
The CUPW is now distributing leaflets claiming they want to deliver mail, but Canada Post won't allow them and urging supporters to contact Minister of Labour Lisa Raitt to stop Canada Post's cuts.
UPDATE June 13: The Canadian Union of Postal Workers has issued a statement accusing Canada Post of aggressively trying to force postal workers out on a full-scale national strike in order to secure back-to-work legislation from the majority Conservative government.
"Canada Post is doing everything it can to provoke the union into a
national walkout in the hope that the government will intervene,"
said CUPW's National President and Chief Negotiator Denis Lemelin.
CUPW claims it offered to suspend its rotating strikes and go back to work, provided that the expired collective agreement is reinstated in order to protect members on the work floor, Canada Post management has refused. CUPW says its offer to call the strike off still stands.
"They are not interested in negotiating with us to end this strike. They
want to force postal workers to take concessions," said Lemelin. "To
that end, they are suspending postal service across the country, even
where no picket lines are up."
Today the following locations went on strike action:
- Breton, NS (Sydney, North Sydney, Sydney Mines, New Waterford and Glace Bay)
- Fredericton, NB
- Mauricie, QC
- Sherbrooke, QC
- Corner Brook, NL
- Cornwall, ON
- Windsor, ON
- Niagara Falls, ON
- Regina, SK
- Nanaimo, BC
UPDATE June 9: Canada Post has announced that due to the rotating strike situation, it will be reducing its services, delivering mail only three times a week in some instances. Daily mail volumes at Canada Post have fallen up to 50 per cent since the union started rotating strikes on June 3rd.
According to Canada Post:
- Staffing levels at mail processing plants across the country will be reduced to adjust to the reduction in mail volumes at each facility.
- Letters and Admail will be delivered three days a week (Monday, Wednesday and Friday) in mostly urban areas where delivery is performed by letter carriers.
- Most small packages and documents will also be delivered three days a week. Every effort will be made to continue to deliver priority items five days a week.
Unaffected areas include:
- Delivery of mail to rural mailboxes and community mailboxes will continue five days a week where service is provided by Rural and Suburban Mail Carriers (RSMCs) who operate under a separate collective agreement than urban employees.
- Post Office operating hours and access to post office boxes will remain unchanged.
- Pick-ups from qualified customers and mail collection at street letter boxes on major streets will continue as usual.
- Delivery of all parcels will continue as usual.
UPDATE June 7: Victoria and Moncton are the latest to be hit by the rolling strike.
UPDATE June 6: After failing to reach an agreement with Canada Post, the Canadian Union of Postal Workers has enacted a rolling strike system which has so far seen disruptions in Winnipeg, Hamilton and Montreal. The Union has not announced the target of its upcoming strike locations, but each location has suffered 24 hours of strike action each.
According to the CUPW, the latest Montreal location was chosen "to highlight the problems experienced by postal workers who are dealing directly with the new technology and work methods resulting from Canada Post Corporation’s $2 billion mechanization program."
UPDATE May 30: The Canadian Union of Postal Workers announced that it given its 72 hour strike notice, meaning that unless an agreement is reached with Canada Post, postal workers will walk off the job starting at 11:59pm on Thursday. The Union has not revealed the type of strike action it is planning, whether it is a rotating strike or a complete job walk off.
The last postal strike in Canada occurred in 1997 and lasted for two weeks.
Despite the union claiming the negotiations were, for the most part, not about wages, it remains a sticking point between the two parties. According to the Toronto Star, CUPW is demanding wage increases of 3.3 percent, 2.75 percent, 2.75 percent and 2.75 percent in each year of a four-year deal. Canada Post is currently offering 1.9 percent, 1.9 percent, 1.9 percent and 2.0 percent.
UPDATE May 24: The Canadian Union of Postal Workers announced Sunday that it does not intend to hold a strike action on May 25th while it continues negotiations with Canada Post. The Union is required to give 72 hours notice before any strike action.
Among the points of contention are wages for new employees, which Canada Post propose to be dropped from $24 per hour to $17.50 an hour. Other points proposed by the union cover health and safety issues as well as hiring practices.
A new agreement would last until July 31, 2014. Unlike many postal systems around the world, including the U.S. Postal Service which has seen losses of US$2.2 billion in the last quarter, Canada Post has remained profitable in the last 16 years.
Pensioners and those on social assistance can expect to receive their checks even if a strike does occur through the use of volunteer post carriers.
UPDATE May 19: Canada Post announced that it will know Sunday whether or not CUPW intends to commence strike action on May 25. Meetings between Canada Post and CUPW continue. Customers can receive the latest information immediately via email or SMS message by registering at www.infopost.ca/customer.
Members of the Canadian Union of Postal Workers (CUPW) have voted overwhelmingly in favour of striking if necessary to gain its demands. The earliest date the CUPW could go on strike is May 25.
"A 94.5 percent strike vote sends a clear message to Canada Post," said Denis Lemelin, CUPW National President. "CUPW members want a collective agreement that recognizes our work is behind the increases in profits and productivity. They want management to share, instead of attacking our wages, rights and working conditions."
The CUPW represents more than 50,000 postal workers in Canada. The last collective agreement was signed between CUPW and Canada Post in 2007 and expired on January 31, 2011.
"Canada Post remains optimistic that a negotiated settlement can be reached just as it has in each round of collective bargaining with CUPW since 1997," said the Corporation in a statement.
"We are confident that we will reach a negotiated settlement because we are offering employees annual wage increases, a secure pension and continued job security. Under the new collective agreement that has been proposed, members of CUPW will continue to enjoy some of the best wages and benefits in Canada."
Over the weekend, on June 18, the United States Postal Service (USPS) announced it would no longer accept mail destined for Canada, because of the strike by the Canadian Union of Postal Workers.
“As a convenience to our customers and to minimize service disruptions, we arranged to accept mail destined for Canada as long as possible,” said Giselle Valera, VP of Global Business for USPS. “We will continue to closely monitor the strike situation, and once Canada Post resumes operations, the U.S. Postal Service will again begin accepting mail for Canada. We also will then resume processing any Canadian-destined mail currently held in our network.”
While Canada Post officials told its U.S. counterparts that they expect the strike to last until sometime this week, based on introducing a back-to-work bill, USPS does allow customers to send letters and packages to Canada via its Global Express Guaranteed (GXG) service. Delivered through FedEx Express, GXG is a premium-shipping platform.
Updates on USPS’ Canadian mail suspension can be found on a dedicated Webpage.
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