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USPS Ends 2009 with $3.8 Billion Loss - November 18, 2009
[Press Release.]The U.S. Postal Service (USPS) today filed its 2009 fiscal year-end financial results, showing a net loss of $3.8 billion for the year — despite cost-cutting efforts resulting in $6 billion in cost savings and a $4 billion reduction in required payments for retiree health benefits. Cost savings reflect a reduction of 40,000 career USPS employees as well as reductions in overtime hours, transportation and other costs. The $4 billion reduction in required retiree health benefit payments was passed into law for fiscal 2009 to allow USPS to maintain fiscal solvency while continuing to provide universal, affordable service to the nation.
Details of 2009 results include:
· Operating revenue of $68.1 billion, compared to $74.9 billion in 2008;
· Operating expenses of $71.8 billion, compared to $77.7 billion in 2008;
· Net loss of $ 3.8 billion, compared to $2.8 billion in 2008; and
· Total mail volume of 177.1 billion pieces, compared to 202.7 billion pieces in 2008, a decline of more than 25 billion pieces, or 12.7 percent.
“Our 2009 fiscal year proved to be one of the most challenging in the history of the Postal Service,” said Chief Financial Officer Joseph Corbett. “The deep economic recession, and to a lesser extent the ongoing migration of mail to electronic alternatives, significantly affected all mail products, creating a large imbalance between revenues and costs.”
Corbett said that USPS responded aggressively to unprecedented mail volume declines and the ongoing recession. “We undertook comprehensive cost-cutting measures across all areas of the organization,” he said. “Most notably, we reduced work hours by 115 million, or the equivalent of 65,000 full-time employees — a larger number than the entire workforce at more than 80 percent of Fortune 500 companies today.”
Several significant accruals in the year increased the 2009 net loss by $1.7 billion but did not affect current year cash flow:
· An increase in estimated Workers Compensation liability of $718 million, primarily to reflect lower interest rates;
· An increase in estimated deferred revenue recognition on prepaid postage of $756 million, primarily based on newly-available data on customer purchases and use of stamps; and
· Accrued retirement incentives of $197 million for 13,400 employees who applied for the incentive prior to Sept. 30, 2009.
In its report on the financial statements contained in the Postal Service’s 2009 report, independent auditor Ernst & Young issued an unqualified audit opinion, but emphasized that questions remain about the ability of the Postal Service to generate sufficient liquidity to make all of its payments, including the $5.5 billion retiree health benefits payment due on the last day of 2010. “There is significant uncertainty as to whether the United States Postal Service will have sufficient liquidity to make this payment on Sept. 30, 2010,” the opinion stated.
The Postal Service will file its 2010 Integrated Financial Plan later this week, outlining plans and goals for the coming year. While further revenue losses and mail volume declines are expected, Potter said USPS will continue to move aggressively to meet the challenges posed by the current economic downturn.
“We realize our customers are facing the same economic challenges,” said Potter. “That’s why we are not raising prices on First-Class Mail, Standard Mail and our other market-dominant products in 2010,” he said.
The 2010 plan, which estimates a revenue decline of $2.2 billion, a net loss of $7.8 billion, cost reductions of more than $3.5 billion and a reduction in mail volume of 11 billion pieces for the year, is based on the assumption that there will be no change in the number of delivery days per week, and no change in the current retiree health benefits payment schedule.
“We’re grateful to Congress and the Administration for the necessary 2009 adjustment to our retiree health payment,” said Postmaster General John Potter. “This was a welcome and much-needed change to assure that the Postal Service was able to meet all of its obligations at the end of the fiscal year and over the course of 2010.” Potter stated, however, that the Postal Service faces “a sobering reality” of the same problem in 2010 and every year in the near future. “As volume contracts and we struggle to match the costs of an expanding delivery network with revenues received, it’s clear that long-term success requires fundamental, legislative change,” he said.
Potter said that legislation must address “the impossible demands” of prefunding future retiree health benefits at current levels of more than $5 billion annually; the barriers to matching delivery frequency with declining mail volumes; and the ability to leverage the Postal Service’s logistics, distribution and retail networks to create new revenue streams.
“In 2010 we will engage our customer and business partner stakeholders, the Administration and Congress, and the American people in a dialogue to determine a more financially sustainable future,” said Potter. “The Postal Service remains a vital driver of the American economy and an integral part of every American community.”
Pakistan Post To Open 100 Express Centres - November 16, 2009
[Daily Times.]Pakistan Post will open 100 express centres, including six centers in Lahore, to facilitate traders and industrialists across the country, Deputy Post Master General Nasir Hassan said in a press statement on Sunday. The first centre would open in Lahore next month, the statement said. The express centres would offer all the postal facilities to customers including urgent mail service (UMS), fax money order (FMO), international speed post (ISP), registry and parcel. The centres would also provide money transfer facilities. According to the statement, the Pakistan Post would establish 45 express centres in Punjab and six would be established in Lahore alone. He said the first centers in the city would open during next month.
USPS PMG Insists On Five-Day Delivery As Part Of Postal Service Reform - November 16, 2009
[Kate Muth, DM News.]John Potter, postmaster general and CEO of the US Postal Service, used the open session of the November 13 USPS Board of Governors meeting to press again for structural reform of the agency, insisting that real reform must reduce the number of delivery days from six to five per week.
Reform legislation also must address the “impossible demands” of the current prefunding schedule for retiree health benefits and it must give the USPS freedom to use its extensive retail network to pursue new sources of revenue, Potter said. He thanked the Obama administration and Congress for passing legislation that reduced the Postal Service's payment to its Retiree Health Benefits Fund by $4 billion in fiscal year 2009.
However, Potter added that the USPS needs structural reform, which requires additional legislative changes.
“We must recognize the reality that the Postal Service faces this same problem in 2010 and in years to come,” he said. “We will continue to struggle to match our revenues to the costs of our expanding delivery network.”
The temporary funding relief of $4 billion helped the Postal Service avoid its worst net loss in history for fiscal year 2009. It would have lost $7 billion had it been required to make full payment of $5.4 billion into the fund on September 30, the last day of its fiscal year. Even with this funding relief, the USPS is expected to report on November 16 that it lost about $3.1 billion, its second highest loss since it was reorganized in 1970. The agency will submit a 10K report to the Postal Regulatory Commission and the Office of Management and Budget on next week, which will detail the year-end financial results for FY 2009.
Joseph Corbett, CFO of the Postal Service, said the agency had a volume decline of 26 billion pieces in 2009, the largest single-year volume loss in its history. He added that the agency implemented unprecedented cost cutting, which resulted in an additional savings of $6 billion. Most of the cost cutting came from an aggressive reduction in work hours, or the amount of hours needed to sort, process, transport and deliver the mail. The Postal Service reduced work hours by 115 million, the equivalent of reducing the number of full-time employees by 65,000, Corbett said.
The USPS has targeted further work-hour reductions for next year of about 80 million to 90 million. It anticipates a moderating of its volume and revenue declines, but it still expects losses in both categories, Corbett said.
He added that the Postal Service tends to lag the general economy on recovery, so it does not anticipate growth until the third or fourth quarter of next year. Details about its goals and targets for the 2010 fiscal year will be revealed next week when it also releases its 2010 Integrated Financial Plan, Corbett said.
Fedex Enters Domestic Cargo Business In India - November 16, 2009
[Hindustan Times.]Twelve years after setting up its base for international air cargo operations in India, FedEx Corp, the world's largest express transportation company, has begun domestic express service for the Indian market.
The company said the growing opportunities in the Indian market and the rising GDP prompted it to start the service. It said its superior service, which guarantees consignment delivery reliability would be the main differentiator.
Its subsidiary FedEx India would handle the domestic operations and to begin with it would offer delivery to 50 major Indian cities from 14 key cities.
"To start with, we will cater to all important centers which constitute 60 per cent India's GDP. We will soon expand. India is a high growth market and it is driven by domestic consumption," said Indranil Sen, managing director (marketing for middle east, Indian subcontinent & Africa), FedEx.
With this, India has become the fourth place outside North America where FedEx provides domestic services. The three other countries are China, UK and Mxico.
By commencing domestic operations, FedEx will compete with BlueDart, the Indian arm of DHL. It would also compete with Captain GR Gopinath's Deccan 360 as well as QuickJet, the yet to be launched domestic express cargo venture which has funding from the Tatas as well as AFL of Cyrus Guzder.
USPS Customer Satisfaction Score Reaches Four-Year High - November 13, 2009
[Press Release.]Despite continuing economic challenges, the Postal Service (USPS) continues to deliver high levels of service, with 94 percent of customers surveyed rating USPS as “excellent, very good or good” in the period July 1 to Sept. 30, 2009.
“Customer service and satisfaction are always our priorities,” said Postmaster General John Potter. “The Postal Service remains focused on its mission to provide universal, affordable service to all Americans.” Potter said he is pleased with the 94 percent rating — the highest in four years — and USPS will build on the achievement to reach even higher levels. Prior to the 94 percent rating, USPS received a 93 percent rating of “excellent, very good or good” for five consecutive quarters.
“We will continue to improve service,” Potter pledged. “In fact, we have implemented an even more demanding service measurement system that will allow us to see more easily where we need to focus improvement efforts,” he said.
USPS is implementing the new Customer Experience Measurement (CEM) program, effective with the start of fiscal year 2010, replacing the Customer Satisfaction Measurement program that has been in place since 1991.
CEM is designed to evaluate the total customer experience, from the buying process through service quality. Insights and information from the new measurement system will allow the Postal Service to pinpoint areas of improvement as well as better adjust to changing customer needs. The new system will allow USPS to collect and analyze data from customer surveys and other sources for a more detailed view of customer feedback.
“CEM will help the Postal Service better understand our customers’ perspective,” said Vice President and Consumer Advocate Delores Killette. “By measuring customers’ experiences across all contact points, the Postal Service will build stronger customer relationships and become a more customer-focused organization.”
Killette introduced the new system at today’s Board of Governors meeting, along with the fourth-quarter national performance scores. In addition to the 94 percent customer satisfaction rating, other highlights of on-time mail delivery scores are:
• 96 percent for Single-Piece First-Class Mail overnight delivery for the fourth consecutive quarter
• 95 percent for two-day delivery, up 1 percentage point over last quarter
• 94 percent for three-to-five-day delivery, up 1 percentage point over last quarter.
Chungwa Post Suffers Loss Of NT$20.5 Bil. On Investment - November 13, 2009
[China Post.]Lawmakers yesterday blasted the Chunghwa Post Co., Ltd. for poor management of the postal savings fund, citing an aggregate investment loss of up to NT$20.5 billion in 2008.During a budget screening session held by the transportation committee yesterday morning, lawmaker Lo Shu-lei of the ruling Kuomintang scanned the investment records of Chunghwa Post and found that the firm has suffered losses from investment in several “underground mines in the past years, referring to stocks of firms mired in financial troubles. Lo said that Chunghwa Post posted a loss of NT$91.44 million from investing in Horng Tech, a maker of computer accessories; a loss of NT$150 million from investment in Pacific Electric Wire & Cable; a loss of NT$240 million from investment in Procomp Informatics Co., a now defunct chip-maker.
Lo continued, in 2008 alone, the company posted a red ink of NT$20.5 billion from investment in derivative financial products, due to poor investment risk control.
The lawmaker called for Chunghwa Post to be more careful in managing its investment risk and make investment information more transparent.
In response, You Fang-lai, chairman of the Chunghwa Post, stressed that his company has followed three major principles in making investments, namely security, liquidity and profitability.
But Lo said if the Chunghwa Post really understands how to safeguard the security of its investment, it wouldn't hit the “underground mines.”
She urged the company to step up investment risk management from now on.
Austrian Post Q1-3 2009: Revenue Decline of 3.4 percent - November 13, 2009
[Press Release.]Highlights:
- Ongoing difficult market environment in 2009: Postal services
negatively impacted by recession and electronic substitution
- Group revenue Q1-3 down 3.4%, or EUR 61.4m
- Downward trend continues in Q3: revenue declines 3.2%, or EUR 18.6m
- Volume decline in letter mail and international parcels business,
but growth in Austrian parcels volumes
- Efficiency enhancement and cost reduction measures have a positive
effect: Savings in staff costs and operating expenses
- Earnings before interest and tax (EBIT) in Q1-3 decreases by 9.0% to
EUR 93.7m EBIT in Q3 down 12.8%
- Focus on costs, cash flow and a solid balance sheet structure
- Operating cash flow before changes in working capital in Q1-3 of
EUR 128.4m (minus EUR 33.4m)
- Free cash flow before the acquisition/sale of securities only EUR 20.5
below the previous year
- Balance sheet: surplus of cash and cash equivalents compared to
financial liabilities
- Georg Pölzl assumed office as CEO on October 1, 2009
Austrian Post at a glance
Developments during the first three quarters of the 2009 financial year show that the economic downturn has also had a negative impact on the business operations of Austrian Post. Letter mail and parcel delivery volumes are dependent on the overall market development, consumption patterns of the population and advertising expenditures of companies. Many companies are trying to achieve cost savings also in respect to postal costs, which has negative consequences on delivery volumes and prices for Austrian Post. Accordingly, total revenue of Austrian Post fell by 3.4% in the first nine months of the 2009 financial year, to EUR 1,723.2m. Group revenue declined in the third quarter by 3.2%, to EUR 567.3m.
Revenue in the Mail Division decreased considerably, falling 4.5%, which can be attributed to the economic downswing as well as the e-mail substitution of letters. Similarly, the Parcel & Logistics Division also recorded a drop in revenue (- 2.4%) as a result of recession-related price pressure on an international level. In contrast, the parcel business in Austria developed very positively, registering significant volume growth driven by the new customer Hermes. In the Branch Network Division, lower internal sales reflect the current structural change: prior to market liberalisation, letters are being increasingly picked up from large customers. As a result of these changed customer requirements and the recession-related decrease in mail and parcel delivery volumes, it is absolutely essential to adapt the structure of the branch network and increasingly rely on partner-operated postal service points.
The top priority of Austrian Post is to implement cost reduction measures as a means of counteracting this loss of revenue. Various measures have been initiated in order to sustainably cut staff costs as well as operating expenses. Austrian Post succeeded in compensating for the extensive salary increases in 2009, which were based on the high inflation rate of the previous year, by taking advantage of employee fluctuation and thus reducing its total staff by more than 1,000 employees. Net savings in operating expenses of EUR 12.0m were also achieved.
In the first three quarters of the 2009 financial year, earnings before interest and tax (EBIT) fell 9.0% from the previous year, to EUR 93.7m. Third-quarter EBIT was down by 12.8%. For the year 2009 as a whole, the current economic environment and the cost-cutting measures implemented by Austrian Post’s customers are expected to continue having a negative impact on delivery volumes of postal services. A fundamental improvement in the overall economic situation is not anticipated at the present time.
“On the basis of the ongoing difficult environment for providing postal services, it is important for me to carry out all possible measures at our disposal, both in terms of revenues as well as reducing costs, in order to optimally cope with this market situation”, says the new CEO Georg Pölzl.
French Post Strike Called For November 24 - November 11, 2009
[Connexion.]Post deliveries could be hit by disruption later this month as five unions plan a one-day strike over government reform plans.
The unions, which represent 95 percent of La Poste workers, are planning the 24-hour walkout on November 24 in protest at a new law that would turn the post office into a company with shareholders.
The government insists it is not planning to privatise La Poste and it would be the only shareholder in the societe anonyme.
It says the change in La Postes status is needed for modernising, as it would allow extra sources of funding.
The EU requires it in preparation for the opening up of the European postal market in January 2011.
TNT Post Dispels Myths About Door Drop Media - November 11, 2009
[Hellmail.]TNT Post UK said today it was committed to reducing the environmental impact of its business operations, particularly door drop media, or leafleting, as it is sometimes referred to.
A recent report commissioned by TNT highlights some of the myths surrounding doordrop activity, which has led to a negative perception of the industry in some quarters in comparison to other media.
The report covers the entire supply line from paper production and printing right through to delivery and recycling.
On the TNT UK web site, the company lists selection of myths including:
Myth: Doordrops are a major contributor to landfill
Reality: Only 1% of Doordrop material ends up in landfill sites. The best solution is to recycle doordrops so the material can be used in the production of other products
Myth: Paper production has a big carbon footprint
Reality: Carbon is actually locked within paper and as such the carbon footprint of paper is much lower than expected. To support this a recent UN led seminar on energy and forest products concluded that paper and print are part of the solution to mitigate climate change.
Myth: Mail and Doordrops are a larger polluter when compared to other households
Reality: They represent just 0.1% of total household CO2 emissions in Europe, that equates to around 14kg of CO2 per year, the same as a 40 mile car journey.
Post Office Remains Consumer Favourite For Foreign Exchange And Travel Insurance - November 11, 2009
[Press Release.]The UK public has once again named the Post Office as its favourite travel insurance and foreign exchange provider at this year’s British Travel Awards. The Post Office has secured the title of Best Travel Insurance Company for four consecutive years, and enjoyed three consecutive years as Best Foreign Exchange Company.
The UK’s largest bureau de change provider scooped the prize ahead of several major competitors to secure a third (33 per cent) of all votes in the category, and almost a quarter (24 per cent) of votes for the travel insurance award.
The British Travel Awards is the largest of its kind in the UK. This year more than 100,000 votes were cast by a mixture of the public and industry professionals across a range of categories.
Sarah Munro, Post Office Head of Travel Services, said: "We are absolutely delighted that customers have again chosen us as their favourite travel insurer and foreign exchange provider. Our Travel Insurance policies offer customers value for money and great quality of care including our five day claims guarantee, and as the UK’s largest travel money provider, we offer unrivalled access to more than 70 currencies through our 11,500 branches, online and by phone. It’s important to us that our customers are happy with the services we provide, and we will continue to work hard to ensure we are offering them what they need."
Lorraine Barnes-Burton, CEO of the British Travel Awards, said: "The British Travel Awards are highly regarded within the industry and the Post Office has once again proven that it is a leader amongst travel insurance and foreign exchange providers with the voting public."
The Post Office handles over 10 million travel money transactions annually and issues almost a million travel insurance policies every year.
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