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USPS set to begin negotiations with its unions

By Jeff Berman, Group News Editor
September 02, 2010

At a time when it is up against daunting financial conditions, the United States Postal Service (USPS) said it has kicked off negotiations with the American Postal Workers Union, AFL-CIO (APWU).

The APWU is the largest of the Postal Service’s four unions and represents 211,000 employees, including clerks, mechanics, vehicle drivers, custodians and some administrative positions. The APWU’s contract is set to expire on November 20, according to the USPS.

USPS officials said that the contract for 207,000 employees represented by the National Association of Letter Carriers (NALC), who deliver in metropolitan areas, expires on November 20, 2011, which is the same date the contract expires for the 49,000 employees represented by the National Postal Mail Handlers Union (NPHMU) who work in mail processing plants and Post Offices. Contract negotiations for these two unions will commence roughly 90 days prior the contracts’ expiration date.

And the contract for the fourth USPS union—the National Rural Letter Carriers’ Association (NRLCA), which represents 67,000 career and 48,000 non-career employees that deliver primarily in rural and suburban areas expires on November 20 of this year, with contract negotiations beginning on September 13.

“We have worked successfully with our unions in the past to help transform the Postal Service and we hope to maintain this momentum during these negotiations,” said Anthony Vegliante, USPS Chief Human Resources Officer and executive vice president, in a statement. “Our goal is to negotiate a contract that’s fair to our customers, fair to our employees and meets our financial and operational needs.”

Meeting future financial needs is imperative for the USPS, considering that during the fiscal third quarter it incurred a net loss of $3.5 billion compared to $2.4 billion for the same timeframe last year, with operating revenue at $16 billion, a $294 million annual decline. Operating expenses—at $19.5 billion—were up $789 million year-over-year.

This is the 14th net loss in the last 16 quarters for the USPS, with its fiscal 2010 year-to-date net loss at $5.4 billion compared to $4.7 billion at this point in 2009.
USPS officials said the increase in operating expenses was mainly due to higher workers’ compensation expenses because of a non-cash fair value adjustment and higher retiree health benefits expenses.

Mail volume for the quarter—at 40.9 billion pieces—was down roughly 700 million pieces of 1.7 percent.  Due largely to an ongoing diversion to electronic alternatives, including e-mailing business documents and online purchasing orders, as well as other electronic mailing processes, the USPS has been under difficult circumstances for more than three years. What’s more, it is faced with the possibility of a projected $7 billion shortfall for Fiscal Year 2011.

A March 2010 report by the Government Accountability Office (GAO) indicated that the USPS needs to consider various restructuring steps to stem its significant revenue and volume declines it has incurred in recent years. The report also noted how USPS mail volume has declined by 35 billion pieces-or 17 percent-from fiscal years 2007-2009, losing $12 billion during that span. It also mentioned how the USPS does not expect total mail volume to return to its previous level when the economy recovers, forecasting that total mail volume will decline to 167 billion pieces in fiscal year 2010-its lowest level since fiscal year 1992 and 22 percent off its fiscal year 2006 peak.

During that same month, the USPS released a report-“Ensuring a Viable Postal Service for America: An Action Plan for the Future”-which addressed seven key areas which would make it a more financially viable entity, including restructuring retiree health benefits for as many as 800,000 retirees, even though it only has an active work force of 596,000 career employees (left uncorrected, that bill will reach $4 billion next year), adjusting delivery days to better reflect current mail volumes (this likely would mean the end of Saturday home delivery, although most of its 32,741 post offices would remain open that day), among other initiatives.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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