As the United States Postal Service looks at a nearly $20 billion deficit, Saturday delivery has become the target.
Last week, the U.S. Postal Service announced plans to transition to a new delivery schedule during the week of Aug. 5 that includes package delivery Monday through Saturday, and mail delivery Monday through Friday.
The Postal Service expects to generate cost savings of approximately $2 billion annually, once the plan is fully implemented.
“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,” said Patrick R. Donahoe, Postmaster General and CEO. “We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings.”
While stopping delivery on Saturdays is expected to save the postal service nearly $2 billion annually, it does very little to decrease the overall deficit.
According to a USA Today report, much of the postal service problems center around legislation passed by Congress in 2006. Since 2006, the Post Office has been legally required to pre-fund health benefits for future retirees at the cost of around $5.5 billion a year. The Postal Service defaulted on the annual payment last year.
According to reports, before Congress passed the 2006 mandate, the Post Office was doing fine fiscally.
Still, besides the 2006 legislation, the Post Office has also had to compete with digital technology. People text and email more than ever before, cutting down the need to send letters.
The Post Office has also had to compete with private agencies such as USPS and FedEx for packaging.
Over the past several years, the Postal Service has advocated shifting to a five-day delivery schedule for mail and packages. However, recent strong growth in package delivery (14 percent volume increase since 2010) and projections of continued strong package growth throughout the coming decade led to the revised approach to maintain package delivery six days per week.
“Our customers see strong value in the national delivery platform we provide and maintaining a six-day delivery schedule for packages is an important part of that platform,” said Donahoe. “As consumers increasingly use and rely on delivery services — especially due to the rise of e-commerce — we can play an increasingly vital role as a delivery provider of choice, and as a driver of growth opportunities for America’s businesses.”
Once implemented during August of 2013, mail delivery to street addresses will occur Monday through Friday. Packages will continue to be delivered six days per week. Mail addressed to PO Boxes will continue to be delivered on Saturdays. Post Offices currently open on Saturdays will remain open on Saturdays.
Given the ongoing financial challenges, the Postal Service Board of Governors last month directed postal management to accelerate the restructuring of Postal Service operations in order to strengthen Postal Service finances.
“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,” said Donahoe. “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.”
Since 2006, the Postal Service has reduced its annual cost base by approximately $15 billion, reduced the size of its career workforce by 193,000 or 28 percent, and has consolidated more than 200 mail processing locations. During these unprecedented initiatives, the Postal Service continued to deliver record high levels of service to its customers.
While the change in the delivery schedule is one of the actions needed to restore the financial health of the Postal Service, officials say legislative change is urgently needed to address matters outside the Postal Service’s control. The Postal Service continues to seek legislation to provide it with greater flexibility to control costs and generate new revenue and encourages the 113th Congress to make postal reform legislation an urgent priority.
The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.