Parcel giants FedEx and UPS will still be able to keep piggybacking on the U.S. Postal Service network to remote locations, after the ailing agency on Wednesday pulled back on plans to close thousands of rural post offices.
Postmaster General Patrick Donahoe said the hours of rural post offices will be trimmed instead, saving roughly $500 million annually. Parcel carriers rely on the agency’s rural reach to serve customers that wouldn’t be profitable for them to serve without the U.S. government mandate for the USPS to serve all Americans.
“Meeting the needs of postal customers is, and will always be, a top priority. We continue to balance that by better aligning service options with customer demand and reducing the cost to serve,” said Donahoe. “With that said, we’ve listened to our customers in rural America and we’ve heard them loud and clear — they want to keep their Post Office open.”
The move comes roughly two weeks after the Senate balked at allowing the USPS to fully implement an overhaul the agency says is needed to return to profitability. The Senate bill would reimburse the USPS about $11 billion for overpaying into the federal workers’ retirement fund. But the bill wouldn’t allow the agency to cut close thousands of offices and mails processing centers, roughly 120,000 employees and Saturday delivery.
The agency expects to lose $83.2 billion by 2016 if it doesn’t receive support for all the reforms needed. In addition to rising retirement fund costs, the USPS has been hit by a dramatic decline of business, largely caused by customers shifting from traditional mail to electronic communications