U.S. Postal Service Seeks to Save $3 Billion
If you are the procrastinating type, you might want to start planning on sending your Christmas cards early this year, just to practice for next year. The U.S. Postal service announced Monday that it will move forward with cost-saving plans that include eliminating next-day delivery of first class mail. It will also seek permission to close about 200 mail-processing plants and lay-off 30,000 employees. In all, these measures are expected to save $3 billion by 2015.
In the past decade, the postal service has lost 29 percent of its first class mail volume, but this doesn't mean that it's become unnecessary. The remaining 71 percent contributes to 140 billion pieces of mail handled annually by the government carrier. While e-mail and all its technological advances have cut into the USPS's base, it remains the only carrier that reaches every address in the nation.
In its present form, though, it can't avoid bankruptcy. Hence, cost-cutting.
"The U.S. Postal Service must reduce its operating costs by $20 billion by 2015 in order to return to profitability,” said David Williams, vice president of network operations for the USPS.
In order to implement the changes, the postal service must first get permission from federal regulators. Larger, institutional changes (such as eliminating Saturday delivery) require Congressional action. In an election year, the Postal Service will be in the unenviable position of asking lawmakers to allow it to cut jobs, stop paying into pension and retirement funds, and altering its service offerings.
Although no changes are expected to take place until Spring 2012, the USPS has been considering cost-saving proposals for several months. Already in the red for billions, it projects a $14 billion short-fall for this year.
The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.
Millions of Americans depend on the postal service for delivery of games and movies, benefit checks, magazines and much more. A change in its operating procedures would require more planning on behalf of the mailer, but it might also be enough to make it more competitive.
Image: A conveyor belt at a processing center, USPS