Barron’s reports on the impact USPS losses have on competitors UPS and FedEx, and along the way offers a surprisingly realistic summary of the current situation, and how we got here:
- The United States Postal Service on Friday reported a fiscal third-quarter loss of $2.3 billion on sales of $17.1 billion. That’s a big loss, but it isn’t all the fault of the USPS.
- The U.S. government began requiring the USPS to prepay retiree health-care obligations in 2007 partly because it was making a lot of money back then. The added expense accounts for most of the post office’s losses over those years.
- The USPS pension plans are more than 87% funded, which is actually a little better than the 86% median funding level for companies in the S&P 500.
- The USPS has about $114 billion in health-care obligations recorded and has set aside about $90 billion
- Pensions are required to be pre-funded by law, but health-care benefits are handled on a pay-as-you-go basis by most companies.
Read the full article at Barrons: What the U.S. Postal Service’s Big Loss Means for FedEx and UPS. – Barron’s