Archive for Wednesday, February 6, 2013

U.S. Postal Service to cut Saturday mail delivery to trim costs

February 6, 2013


— The financially struggling U.S. Postal Service said Wednesday it will stop delivering mail on Saturdays but continue to disburse packages six days a week, an apparent end-run around an unaccommodating Congress.

The service expects the Saturday mail cutback to begin the week of Aug. 5 and to save about $2 billion annually, said Postmaster General and CEO Patrick R. Donahoe.

“Our financial condition is urgent,” Donahoe told a press conference.

The move accentuates one of the agency’s strong points — package delivery has increased by 14 percent since 2010, officials say, while the delivery of letters and other mail has declined with the increasing use of email and other Internet services.

Under the new plan, mail would be delivered to homes and businesses only from Monday through Friday, but would still be delivered to post office boxes on Saturdays. Post offices now open on Saturdays would remain open on Saturdays.

Over the past several years, the Postal Service has advocated shifting to a five-day delivery schedule for mail and packages — and it repeatedly but unsuccessfully appealed to Congress to approve the move. Though an independent agency, the service gets no tax dollars for its day-to-day operations but is subject to congressional control.

Congress has included a ban on five-day delivery in its appropriations bill. But because the federal government is now operating under a temporary spending measure, rather than an appropriations bill, Donahoe says it’s the agency’s interpretation that it can make the change itself.

“This is not like a ‘gotcha’ or anything like that,” he said. The agency is essentially asking Congress not to reimpose the ban when the spending measure expires on March 27 and he said he would work with Congress on the issue.

The agency clearly thinks it has a majority of the American public on its side regarding the change.

Postal Service market research and other research indicated that nearly 7 in 10 Americans support the switch to five-day delivery as a way for the Postal Service to reduce costs, the agency said.

“The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America’s changing mailing habits,” Donahoe said. “We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings.”

But the president of the National Association of Letter Carriers, Fredric Rolando, said the end of Saturday mail delivery is “a disastrous idea that would have a profoundly negative effect on the Postal Service and on millions of customers,” particularly businesses, rural communities, the elderly, the disabled and others who depend on Saturday delivery for commerce and communication.

He said the maneuver by Donahoe to make the change “flouts the will of Congress, as expressed annually over the past 30 years in legislation that mandates six-day delivery.”

House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., and Senate Homeland Security and Governmental Affairs Ranking Member Tom Coburn M.D., R-Okla., said in a joint statement that they had sent a letter to leaders of the House and Senate in support of the elimination of Saturday mail.

They called it “common-sense reform”

Others agreed the Postal Service had little choice.

“If the Congress of the United States refuses to take action to save the U.S. Postal Service, then the Postal Service will have to take action on its own,” said corporate communications expert James S. O’Rourke, professor of management at the University of Notre Dame.

He said other action will be needed as well, such as shuttering smaller rural post offices and restructuring employee health care and pension costs.

“It’s unclear whether the USPS has the legislative authority to take such actions on its own, but the alternative is the status quo until it is completely cash starved,” O’Rourke said in a statement.

The Postal Service made the announcement Wednesday, more than six months before the switch, to give residential and business customers time to plan and adjust, officials said.

Donahoe said the change would mean a combination of employee reassignment and attrition and is expected to achieve cost savings of approximately $2 billion annually when fully implemented.

The agency in November reported an annual loss of a record $15.9 billion for the last budget year and forecast more red ink in 2013, capping a tumultuous year in which it was forced to default on billions in retiree health benefit prepayments to avert bankruptcy.

The financial losses for the fiscal year ending Sept. 30 were more than triple the $5.1 billion loss in the previous year. Having reached its borrowing limit, the mail agency is operating with little cash on hand.

The agency’s biggest problem — and the majority of the red ink in 2012 — was not due to reduced mail flow but rather to mounting mandatory costs for future retiree health benefits, which made up $11.1 billion of the losses. Without that and other related labor expenses, the mail agency sustained an operating loss of $2.4 billion, lower than the previous year.

The health payments are a requirement imposed by Congress in 2006 that the post office set aside $55 billion in an account to cover future medical costs for retirees. The idea was to put $5.5 billion a year into the account for 10 years. That’s $5.5 billion the post office doesn’t have.

No other government agency is required to make such a payment for future medical benefits. Postal authorities wanted Congress to address the issue last year, but lawmakers finished their session without getting it done. So officials are moving ahead to accelerate their own plan for cost-cutting.

The Postal Service is in the midst of a major restructuring throughout its retail, delivery and mail processing operations. Since 2006, it has cut annual costs by about $15 billion, reduced the size of its career workforce by 193,000 or by 28 percent, and has consolidated more than 200 mail processing locations, officials say.


Laurie L Folsom 1 year, 2 months ago

Fed Ex, UPS and DHL could care less about privatizing the USPS.

Currently all three private companies drop off packages that are not profitable for them to delivery at...wait for it...the closest Post Office. It is USPS carriers that deliver the private companies' packages to some of the most remote (not profitable) locations. Remote can be defined by these companies as further than 20 miles of their next stop.

I hear complaints about the price of stamps increasing, but what will happen to prices if private companies are the only ones to offer flat mail delivery? For pennies I can guarantee a letter will arrive 100s of miles from me within days. This is only possible because of the scale of an organization like the US Postal Service.


rockchalk1977 1 year, 2 months ago

Too little too late I'm afraid. This is nothing but a money pit of union pensions and benefits. It's time to privatize the Postal Service and get rid of the unions that have destroyed the middle class in this country.


midwest_muser 1 year, 2 months ago

Close half the post offices. Cut mail to Monday Wed, Fri...Lay off half the employees. Then we've got a viable entity.


junkremovalsandiego 1 year, 2 months ago

This is should have been done years ago. The is a good step for our government to start treating bad programs like businesses instead of money pits. embrace change instead of holding on to old ways.


deec 1 year, 2 months ago

The post office has been planning to privatize since at least 2002. The health benefits law is designed to bankrupt the post office to facilitate its privatization. The overpaid benefit funds are held in government bonds to camouflage part of the deficit, just as social security funds are being used. Of course the GOP wants to bankrupt the post office so they can turn it over to their corporate masters at fire sale prices.

"At the other end of the spectrum of options is the possibility of complete transformation of the Postal Service into a shareholder-owned, value-maximizing company. In addition to giving Postal Service managers a full range of private sector managerial tools, this model would place Postal Service managers under the supervision of a Board of Directors representing “residual claimants” (private shareholders) who have “real money” at stake."


Gandalf 1 year, 2 months ago

Does anyone (other than junk mailers) actually care?


thebigspoon 1 year, 2 months ago

My Dad was a rural carrier here and passed away in 1971. There was talk of this when he was a carrier so this isn't something the Post Office just came up with. One of the reasons it hasn't happened sooner is the Letter Carriers Union...


jafs 1 year, 2 months ago

Something I read said that the feds are actually using that money that's supposed to go for future retiree benefits for other spending as well.

The way the federal government has operated re: the post office is shameful.

No tax money is allowed to go towards it, but it's under government control? Requiring ridiculous amounts of pre-funded retiree benefits that are then spent on other things?

Requiring them to continue to operate in such a way so that they can't possibly break even?

One might think they're trying to kill it off, huh?


Fob 1 year, 2 months ago

Eliminate the Postal Clause since the postal business does not make the government any money.


gccs14r 1 year, 2 months ago

I agree that the GOP wants to kill the postal service and hand it over to private companies, but they didn't ask anyone if they actually want it. To my knowledge, no private company wants the headache of daily residential delivery and pickup. Certainly no private company wants that responsibility for the chance to earn a measly 45 cents.

The Postal Service was efficient and profitable until this pre-funded healthcare mandate.


Karl_Hungus 1 year, 2 months ago

I know many posters don't like fact as they are yucky, gross and just plain confusing to them but here ya go. Neocons, you might as well just skip the link and spend that time trying to find a way to blame this on the black man that the rest of us call President


deec 1 year, 2 months ago

The future retirement costs extend out 75 years. The post office is being required to pre-fund health benefits for employees who are not yet born. This GOP-backed legislation is clearly meant to destroy the unions and render the post office vulnerable to privatization.


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