Postal Service to cut Saturday mail to trim costs

The U.S. Postal Service will stop delivering mail on Saturdays but continue to deliver packages six days a week under a plan aimed at saving about $2 billion annually, the financially struggling agency says.
Associated Press
Feb 6, 2013

In an announcement scheduled for later Wednesday, the service is expected to say the Saturday mail cutback would begin in August.

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.

It was not immediately clear how the service could eliminate Saturday mail without congressional approval.

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

Material prepared for the Wednesday press conference by Patrick R. Donahoe, postmaster general and CEO, says Postal Service market research and other research has 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 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 in a statement prepared for the announcement. "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."

There was no immediate comment from lawmakers.

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

"The American public understands the financial challenges of the Postal Service and supports these steps as a responsible and reasonable approach to improving our financial situation," Donahoe said. "The Postal Service has a responsibility to take the steps necessary to return to long-term financial stability and ensure the continued affordability of the U.S. Mail."

He 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.

They say that while the change in the delivery schedule announced Wednesday is one of the actions needed to restore the financial health of the service, they still urgently need lawmakers to act. Officials say they continue to press for legislation that will give them greater flexibility to control costs and make new revenues.

 

Comments

Commenter

I would like to know why the US Postal Service increases stamp prices by 1 or 2 cents? It has to cost a lot of money for the printed support materials with pricing on it. Why not just up it a nickel? And prevent the next 2 or 4? I don't think Saturday mail is that big of a deal, it may be to some, but personally I don't think that one day is going to hurt anything.

The Hero Zone's picture
The Hero Zone

As a business that does use the USPS for eBay sales, I agree. To both concepts. Cutting one day and actually putting postage at what it needs to be to cover costs now and a bit into the future. I think though that the overall service, caught between a union and congress making demands, is being torn apart despite its supposedly-independent nature. USPS and NASA are two government entities with which I heavily empathize.

kURTje

Have those in Executive & mngt. taken cuts or eliminations too?

Trustafarian

I'm glad my Swank and Juggs magazines are delivered on Thursdays.

Commenter

classy

Trustafarian

That what I thought too. When my subscriptions to Cheri and Oui expired I made the switch and haven't looked back.

Perkins2060

My Gallery subscription comes the third Monday of every month.

Licorice Schtick
Trustafarian

I gave it a look. It wasn't the Asian porn I was expecting. I prefer LBFM's more than RAM. But I did enjoy the articles.

eightballcuet1

It was just a matter of time.

donutshopguy

Cut the mail to three days a week. People will adapt.

Trustafarian

I second that motion. Just don't cut Thursdays! ; )

paws4thought

The Post Office keeps raising its rates and wonders why fewer and fewer people are mailing letters versus using emails or competing delivery services. Like every other governmental bureaucracy, the Post Office operates in a highly inefficient manner, is reluctant to change, and goes continually farther in the hole. Couple that with the strangle hold public unions have on the postal workers - Rolando's unbending comments typify problems the unions add to the overall problems - and one has a formula for financial disaster. My guess is there will be no post office in the next 10 - 20 years.

Darkhorse

The government needs to get out of the postal service.

luvblues2

Cool. Another day NOT to receive bills or junk mail.

Contango

Privatize it.

Only the govt. could create a monopoly that would lose money.

Old joke: If the govt. owed a funeral home, no one would die.

Licorice Schtick

But close to reality.

Closer - if funeral homes found out everyone was going to live forever, they'd try to sell their businesses to the government.

Every time someone has a turkey of a building no one wants, they try to sell it to the government.

Randy_Marsh

The government has drones and could *Drone up business for a funeral home.

bayshore

I ralize investigative reporting is a lost art by newspapers. It is much easier to feed the public the pablum that comes of the news wire. Maybe if you would have done some research you would have learned that:

When the US Postal Service was created as a seperate business it was tasked with serving it's customers and meeting it's operating expenses. It was not established as a "for profit" business. Congress dictated the rules on how the business would be run.

Since that inception, Congress and it's Postal Management Board has controlled the operation. How many businesses have been spun off from their parent company but are not allowed to conduct business without getting permission from a board of directors of that former parent company? The people tasked with running the Postal Service have their hands tied by Congress when it comes to making and implementing decisions.

In 2006 Congress mandated the Postal Service to prefund 75 years of future health costs for it's employees and pay that money in 10 years known as the Postal Accountability and Enhancement Act. Each year's cost to the Postal Service and it's customers is $5.5 to 8 Billion. Since 2006, on the first day of each new business year the Postal Service is already that much in the red.

Studies have been done that show, due to faulty formulas provided them, there has been a 50 to 75 Billion dollar overpayment to the Civil Service Retirement System. Postal management has been trying to get Congress to return the overpayment to the Postal Service without success.

Employees hired since 1981 fall under the new Federal Employee Retirement System which is similar to retirement systems used in private buinesses. Employees pay social security taxes and contribute to their retirement with matching funds from the USPS and have retirement accounts, similar to a 401 or IRA available.

The Postal Service and it's management didn't dig themselves into the hole they are in. Congress has dug the hole and shoved them in with no intent of helping them out. $8 Billion times 75 years, payable in 10 years, is a nice pile of money for Congress to waste. Why would they want to give that up. You can bet it won't be there when postal workers need it in 2081 with the way Congress manages money.

Privatizing the postal service would be a disaster for the rural areas and small towns as the "for profit" business that buys the right to deliver the mail would all but ignore those areas because of high costs to operate. UPS and Fed Ex use the postal service to deliver some of their packages for that very reason.

Don't cuss out the postal clerk at the next rate increase. Start screaming at your representatives and senators who have caused this mess and demand they fix it.

Contango

bayshore writes.

"It was not established as a "for profit" business."

A misnomer; there is no such thing as "for profit" or "not-for-profit," there is only "taxed" and "non-taxed."

All business must be profitable or they go outa business.

Most countries have private mail service - privatize it.

The Big Dog's back

Is the military profitable winnie?

Contango

"The military"? Get SEIU to unionize it.

wiredmama222

there is to such a thing as a non profit organization. A church is a non profit organization. I have never heard the term "for profit", just non profit organization.

luvblues2

The USPS is not a gov't entity. It is controlled by the gov't, though.

Contango

The USPS is a NGO, same as Fannie, Freddie and Amtrak - all bankrupt.

luvblues2

It's a NoGO alright. But honestly, I do know what an NGO is.

Contango

And the "fine" job that the yahoos have done with the NGOs they can "certainly" do for health care.

FORWARD SOVIET!

shucks

:)

Factitious

Contango has no idea what he's talking about.

The United States Postal Service is not a Non-Governmental Organization (NGO). While it is operated like a business, it is very much under the control of the United States Government. Some people think it's a government-owned corporation, like AMTRAK, but that's not the case.

NGO's are generally non-profit organizations with various missions and causes. They are operated independent from any government but most are under the jurisdiction of one. (An example of an NGO that is not is the United Nations.) In the United State, charities that meet IRS guidelines are not taxed, but many NGO's, like trade organizations, for example, do pay taxes. Some NGO's operate very much like a busness; others do not.

The term NGO is confusing because it would also seem to describe to for-profit businesses, but that's not what it's used for. Think of it this way - almost every organization is one of three things: a government, or a (for-profit) business, or an NGO.

Contango

@ Factitious:

Sheesh! Talk about rambling off-topic.

The POINT is the USPS is bankrupt. So what's your solution?

Pres. Obama's former economic advisor Peter Orszag has some ideas, read 'em:

http://www.bloomberg.com/news/20...

Pages