Postal Service Proposes to Deliver Mail Only Five Days Per Week

The United States Postal Service is failing financially. That failure is projected to continue through the year 2020 to the tune of $238 billion. To combat their money problems, the Postal Service, with the help of The Boston Consulting Group and two other consulting firms have formulated a plan to soften their economic woes.

What are the causes of the United States Postal Service's problems?

The Postal Service cites the main cause is that they are not bringing in enough revenue because of the electronic age. Like most printed media outlets, Americans are using the Internet to communicate, get their news, and review catalogs instead of the post office. Add in increasing fuel costs with the reduced revenue and the Postal Service can no longer function as a self-reliant service.

This means that the Postal Service is only generating $1.40 per delivery stop. This number is expected to drop to $1.00 by 2020. The Postal Service is trying to plan ahead for a future of declining revenue. Since the department receives no tax dollars, and a survey indicated that tax payers do not want their money going there, the Postal Service has devised several proposed cuts.

Cut Out Saturday Delivery

Postmaster General John E. Potter has already asked Congress to eliminate the law that requires the mail to be delivered six days a week. A Gallup Poll of 992 adults showed that postal customers prefer a five day a week delivery schedule over using taxpayer funds to make up the shortfall.

Closing Post Offices

The Postal Service's plan wants to close post offices and "continue to modernize customer access by providing services more convenient to customers in places such as grocery stores, pharmacies, retail centers, office supply stores. Increase and enhance customer access through partnerships, self-service kiosks and a world-class website, usps.com, while reducing costs." The Gallup Poll mentioned above shows that this is the least favorite option with 88% against closing post offices.

A new post office just sprung up in my local grocery store even though there is a large post office within a quarter-mile of the store. This in-store post office uses the employees who already run the customer service desk to do the postal transactions.

Increasing Prices of Stamps and Packages

The Postal Service is a "pay to play" business. If you need their service, you pay. But only 51% of the Postal Service's operating costs comes from First Class Mail. They want to increase the price of stamps in 2011. The press release did not say how much of increase but this may work against them because as the price of stamps go up, more people look for other ways to pay their bills or send letters.

The Postal Service is also asking Congress to change their mailing structure prices. "Prices for mailing products (Market Dominant) should be based on demand for individual products and their costs, rather than capping each class of mail at the rate of inflation currently required by the Postal Law of 2006.The Consumer Price Index should apply to the entire group of products, rather than each individual mailing class."

Restructure the U. S. Postal Service Retiree Health Benefit Plan

It seems that the Postal Service wants their employees' retirement health plan to be similar to the "pay as you go" plan that is used by the majority of the private sector. Under current law, the agency pays $5.4 billion to $5.8 billion annually to prefund retiree health benefits. This has resulted in an overpayment to the plan.

Despite this plan the Postal Service still estimates a $155 billion shortfall by 2020.

Sources:

http://www.usps.com/strategicplanning/futurepostalservice.htm

http://www.usps.com/strategicplanning/_pdf/Legislative_Regulatory_Actions.pdf

http://www.usps.com/strategicplanning/_pdf/Postal_Facts.pdf

http://www.gallup.com/poll/121268/Americans-Fewer-Mail-Days-Fix-Postal-Budget.aspx

http://www.usps.com/communications/newsroom/2010/pr10_018.htm