business news in context, analysis with attitude

Reuters reports that today is the day. August 1, 2012. Today is the day that the US Postal Service (USPS) is expected to default because it cannot make a $5.5 billion payment for future retiree health benefits, a payment mandated by the US Congress.

A second payment, due at the end of September, also is expected not to be paid.

While the defaults are not expected to have any impact on deliveries - indeed, many experts say that whatever its shortcomings, these mandated payments put the USPS in an untenable position that virtually no other organization faces - the story notes that "trade groups, mailing industry lobbyists and some business owners said the approaching default raises questions about the Postal Service's financial stability and Congress's commitment to helping remedy the agency's money woes.

"Eroding confidence in the Postal Service's future adds incentive for mailers to explore alternatives to traditional mail, they said - a shift that would only deepen the agency's troubles."

The USAPS lost $5.1 billion in 2011.
KC's View:
I've said it before and I'll say it again.

They've been asking all the wrong questions at the USPS. They keep asking whether the closing of some post offices or the elimination of Saturday delivery can help it get into the black. But they ought to be asking how the USPS fits into a world with email, FedEx and UPS, among other competitors.

It goes back to the issue raised in an earlier story this morning...

In an world where fundamental changes are taking place, incremental action almost never suffices.