Losing $25M a day for USPS needs flexibility, Postmaster General Patrick Donahoe tells US Congress

By on Apr 18, 2013 in Business, Finance, United States Comments

The US Postal Service (USPS) is losing $25M a day. This is what US Postmaster General Patrick R. Donahoe told a House committee on Wednesday, April 17, 2013. Donahoe also revealed the same amount of loss last January when he urged the upcoming 113th US Congress to prioritize the changes in postal service.

USPS Postmaster General Patrick Donahoe

USPS Postmaster General Patrick Donahoe
Credit: Christopher Gregory/The New York Times

According to a press release at USPS.com that day, Donahoe told US Congress that the US Postal Service is now operating with a broken business model. He urged lawmakers to include delivery flexibility as part of a comprehensive legislation on postal reform to help USPS recover from financial crisis.

Donahoem, who became the Postmaster General on January 14, 2011, testified before the House Oversight and Government Reform Committee this Wednesday. He said that their financial problems are caused by the restrictive laws that prevent them from fully coping with the changes of the consumers’ needs.

“In the past two years, the Postal Service recorded $21 billion dollars in losses, including the default of $11.1 billion dollars in payments to the United States Treasury. The Postal Service has exhausted its borrowing authority.” Postmaster General Donahoe was quoted telling to US Congress.

“It also continues to contend with a dangerous liquidity crisis. We are losing $25 million dollars every day and we are on an unsustainable path.” Donahoe added, emphasizing that the steep decline in USPS‘ most profitable product category is not the cause of their financial burden.

“Any private sector company could quickly adapt to the market changes we have experienced, and remain profitable. However, we do not have all of the flexibility we need to grow revenue, reduce costs, and adapt to a changing marketplace.” Donahoe said further.

Back in February, the USPS unveiled that they will launch its own clothing line called “Rain Heat & Snow,” in 2014, a joint venture with Wahconah Group, Inc. The same month, the US Postal Service also announced their plan to introduce a new national delivery schedule designed to reduce their costs by approximately $2 billion dollars yearly.

With this, Donahoe urged the US Congress not to block their new delivery schedule when it enacted the next continuing resolution to fund the government for the rest the fiscal year. He insisted that the flexibility under the law is very much needed to implement their new delivery schedule.



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