USPS to cut Saturday delivery of mail to save $2 billion
In an attempt to save itself, Postmaster General Patrick R. Donahoe announced that Saturday mail delivery will cease. Only packages will be delivered Saturday. The cut in service should save the struggling USPS $2 billion a year.
Donahoe made the announcement yesterday.
As the late Sen. C. Everett Dirksen quipped, “a billion here and a billion there, soon adds up to real money.”
If Congress approves the move the financial blood-letting will be curtailed, but not stopped.
“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.”
The Postal Service’s largest problem — and the majority of the red ink in 2012 — was not a result of reduced mail flow but rather to mounting mandatory costs for future retiree health benefits. Those benefits made up $11.1 billion of the agency’s losses.
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, according to ABC News.
Without that heavy burden weighing the USPS down and other related labor expenses, the mail service sustained an operating loss of $2.4 billion, lower than the previous year.
If Congress does not object to the elimination of Saturday mail delivery, the savings realized from such a move would result in a $2 billion savings. Perhaps by 2014 the service should be breaking even.
If, and it’s a big if, the Postal Service continues to trim its workforce, restructure its retail, delivery and mail processing services it could save billions more.
Since 2006, the service has cut $15 billion from its budget. It has reduced its workforce by 193,000 (28 percent) and it has consolidated 200 mail processing centers.
If Congress and the administration would do the same, who knows, the USPS budget and the nation’s budget might balance in 2014.