The U.S. Postal Service, showing unprecedented boldness in an attempt to reverse deep losses, plans to stop next-day delivery of First-Class mail as part of an effort to cut some $3 billion in annual costs.
With no help from Congress on the horizon, the USPS plans to slow First-Class delivery, the agency’s most profitable business, starting next spring. The USPS said slowing delivery to the second or third day will allow the Postal Service to cut numerous facilities and make other cutbacks amounting to $2.1 billion in savings.
The cutbacks could include closing more than half the USPS's mail processing centers. The Postal Service says it is studying 252 of its 487 facilities for closure.
The USPS “must reduce its operating costs by $20 billion by 2015 in order to return to profitability,” said David Williams, vice president of network operations. “The proposed changes to service standards will allow for significant consolidation of the postal network in terms of facilities, processing equipment, vehicles and employee workforce and will generate projected net annual savings of approximately $2.1 billion.”
The USPS, which lost $5.1 billion in its last fiscal year, said it needs to cut some 120,000 workers, break labor agreements, close thousands of post offices, privatize its healthcare program and end Saturday delivery to become profitable again. First Class mail revenue fell 5.8 percent last year, and the agency expects revenue to decline 7 percent annually, largely because of the increased popularity of electronic communication.
The USPS said it is requesting an advisory position from the Postal Regulatory Commission but is not waiting for approval from the commission. The USPS's proposal comes after failing to convince Congress of the urgency of the agency's fianancial woes.
Postmaster General and CEO Patrick Donahoe said bills in the House and Senate and President Obama’s reform proposals don’t go far enough in allowing the USPS to adopt a “rational business model.” The agency could be righted if elements of each proposal were pooled together, Donahoe said last month.