Another indication that the Post Office is not competitive in its current form:
Postal Service Losing Out on Federal Contracts, Report Finds
By RON NIXON
New York Times
January 22, 2013
WASHINGTON — Even the federal government turns to private shippers rather than the Postal Service when it wants to send packages.
A report from the agency’s inspector general said that since 2001, private companies like FedEx and United Parcel Service had consistently captured 98 percent of the revenue from long-term shipping contracts with the government because the financially troubled Postal Service did not have a sales staff or a strategy to focus on the federal sector until 2009.
The report said the Postal Service lost out on about $34 million in potential revenue over the last two years, a relatively small amount for an agency that reported $65 billion in revenue last year. But officials at the inspector general’s office said the Postal Service, which had a net loss of $15.9 billion last year, could not afford to pass up opportunities to generate revenues and profits no matter how small.
“Every little bit helps,” said Agapi Doulaveris, a spokeswoman for the inspector general’s office. “The purpose of our audits are to help them identify ways to do things better. Every opportunity we identify helps adds to their bottom line.”
The report, released on Friday, examined two years of shipping contracts made through the General Services Administration, which buys goods and services for the federal government.
While federal shipping contracts totaled an estimated $336.9 million last year, the Postal Service earned only $4.8 million of that — less than 2 percent of the overall amount, the report found.
The post office’s ability to compete in the federal shipping market is hampered by several factors besides its late entry, the report found, including an inability to guarantee two- to three-day delivery service and to be as flexible in setting prices as its competitors.
Because of federal law, “the Postal Service cannot sell products below cost and make up the loss with other products or services to penetrate a market, attract new customers or match competitors’ prices,” the report found.
Postal officials, who did not address why the agency entered the federal shipping market years after their private competitors, said they were addressing the problems raised in the report. But the findings underscored the challenges the agency faces as it tries to find new ways to increase revenue to offset a long-term decline in mail volume.
Last year, the Senate passed a bill to overhaul the agency that would have provided retirement incentives for nearly 100,000 of the post office’s 547,000 workers. The bill would have also allowed the agency to study the elimination of Saturday delivery if it could not cut costs in two years; offer a broader range of services, like delivering beer and wine for retailers; and recoup more than $11 billion it had overpaid into a pension fund. The House never voted on the bill.
In the meantime, the agency has taken steps to address its financial problems without Congressional approval. It has cut hours at hundreds of small, rural post offices, consolidated mail processing centers and reduced staffing levels.
The Postal Service also plans to again raise the price of a first-class stamp by a cent, to 46 cents, this Sunday.
http://www.nytimes.com/2013/01/23/us/politics/post-office-losing-out-on-federal-contracts-report-finds.html?partner=rss&emc=rss&smid=tw-nytimes&_r=0&pagewanted=print |
