• on Mar 3rd, 2014 in Ideas Worth Exploring | 4 comments

    Canada Post shares a number of similarities with the U.S. Postal Service, including its founding by Benjamin Franklin in 1753 when both Canada and the 13 colonies were under British rule. Both posts are self-supporting, meaning they pay for their operations through the sale of postage and services. And Canada Post, like the Postal Service, has suffered volume losses the past few years.

    Here’s where things get different, though. Canada Post has adopted a radical plan to restore its financial health, featuring bold initiatives that might seem too politically difficult in the United States. Canada Post’s five-point plan is intended to streamline operations, cut costs, and return the corporation to fiscal self-sufficiency by 2019.

    The plan features:

    1. Ending to-the-door residential delivery over 5 years. Two-thirds of Canadian residents already are without to-the-door delivery, so, while it is a major change, perhaps it is not as disruptive as it would be in other countries.
    2. Upping the price of postage. Bought in bulk, stamps that now cost 63 cents (CAD) will be 83 cents. Bought singly, the same stamps will cost $1. The increase still needs approval from the regulator.
    3. Streamlining via franchise post offices. Franchise post offices are more convenient for customers and less costly to operate. There’s a moratorium, however, on closing existing rural post offices given their popularity among customers.
    4. Increasing efficiency. Consolidation and technology improvements, including faster sorting equipment and more fuel-efficient vehicles, should improve operations. No resulting changes are expected in the corporation’s fairly relaxed 2- to 4-day delivery standard for letter service, yet parcel delivery is expected to improve.
    5. Reducing labor costs. Along with the service cuts, Canada Post said it would eliminate 8,000 jobs, mostly through attrition.

    Canada’s plan has met with criticism from opposition political leaders, labor unions, and some citizens. But Canada Post defends the plan saying without major operational changes it will lose $1 billion a year starting in 2020. It also faces a $6.5 billion pension fund shortfall.

    What could the United States learn from the Canada Post plan? Are some of these initiatives worth trying in the United States? Or are they not the right approach for the U.S.? What cost-cutting and revenue-generating ideas should the Postal Service focus on? 

  • on Oct 31st, 2011 in Pricing & Rates | 12 comments
    When mailing a letter that weighs about one ounce, the U.S. Postal Service’s 44 cents is one of lowest First Class postage rates. Whether you are mailing a letter locally or sending a greeting card across country, it still only costs 44 cents now, but will increase to 45 cents in January. The graph below compares the U.S. Postal Service’s postage rate with other countries. As you can see, Norway charges the highest rate, which is nearly four times the cost U.S. rate.

     

    Source: 2011 Office of Inspector General analysis of Universal Postal Union data

    Some might feel it is reasonable for the Postal Service to increase rates and charge a fee comparable to those in other countries. On the contrary, others might say the Postal Service’s rate must remain at an affordable level, especially for people with lower incomes. They might also say raising the rate to a level found elsewhere would drive customers away even faster. When you think about prices paid for other goods and services, just how far does 44, 50, or even 75 cents go? By comparison, a small cup of coffee at McDonalds costs a dollar, a gallon of gasoline is over $3, and a gallon of milk is about $4. Share your thoughts below. This topic is hosted by the OIG’s Financial Reporting Directorate.
  • on Jan 10th, 2011 in Finances: Cost & Revenue | 6 comments
    Postage Meters are printing machines or systems for home or office that print postage directly onto mailpieces, or onto an approved label, for mailing. Customers can request refunds on meter mail for a variety of reasons. For example, customers can request refunds when meter mail postage is printed for the wrong denomination, mail is damaged before it is delivered to the Postal Service, or postage is printed but not mailed. For customers to receive a refund, they must take their unused meter mail postage along with the Postal Service Form 3533, (Application for Refund of Fees, Products and Withdrawal of Customer Accounts),to their local post office to request the refund. Once postal employees receive a refund request, they process the request manually by counting each piece of metered postage in question to verify the refund amount. The Postal Service charges a 10 percent fee (up to $350) for each refund processed. If the 10 percent fee is greater than $350, the Postal Service charges the customer a flat fee of $35 an hour to process the refund. Once the local postal employee verifies the refund amount, the post office either issues a no-fee money order (if the refund is less than $500) or forwards the supporting documentation to a disbursement center for refund payment. In Fiscal Year 2010, the Postal Service refunded customers more than $21 million for spoiled and unused meter mail postage. If all associated mailpieces were metered at the First-ClassTM 44-cent stamp rate that would mean postal employees manually counted 47.7 million mailpieces to verify meter mail refunds. The topic is hosted by the Office of Audit Field Financial – West team.

Pages