Post office may suspend a day of delivery

By Reuters Staff
January 28, 2009

To reduce expenses, the USPS may cut back deliveries to five days per week.  AP:

Massive deficits could force the post office to cut out one day of mail delivery, the postmaster general [John Potter] told Congress on Wednesday, in asking lawmakers to lift the requirement that the agency deliver mail six days a week.  If the change happens, that doesn’t necessarily mean an end to Saturday mail delivery. Previous post office studies have looked at the possibility of skipping some other day when mail flow is light, such as Tuesday.

Faced with dwindling mail volume and rising costs, the post office was $2.8 billion in the red last year. “If current trends continue, we could experience a net loss of $6 billion or more this fiscal year,” Potter said in testimony for a Senate Homeland Security and Governmental Affairs subcommittee.

Total mail volume was 202 billion items last year, over 9 billion less than the year before, the largest single volume drop in history.

And, despite annual rate increases, Potter said 2009 could be the first year since 1946 that the actual amount of money collected by the post office declines.

“It is possible that the cost of six-day delivery may simply prove to be unaffordable,” Potter said. “I reluctantly request that Congress remove the annual appropriation bill rider, first added in 1983, that requires the Postal Service to deliver mail six days each week.”

According to the article, this won’t happen right away, but the post office needs flexibility to cut costs, including large pension obligations:

Potter also asked that Congress ease the requirement that it make advance payments into a fund to cover future health benefits for retirees. Last year the post office was required to put $5.6 billion into the fund.

Pension obligations seem to be a bigger problem than a sixth day of delivery, which if eliminated will save about $2 billion annually.

As noted above, mail volumes are falling quickly.  According to Potter,

“A revolution in the way people communicate has structurally changed the way America uses the mail,” with a shift from first-class letters to the Internet for personal communications, billings, payments, statements and business correspondence.

To some extent that was made up for my growth in standard mail—largely advertising—but the economic meltdown has resulted in a drop there also.

Home prices are getting cheaper and junk mail volumes are down.  At least the economic meltdown has some fringe benefits!

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