USPS May Cut Saturday Delivery Service

In many rural districts the USPS is still the most reliable connection to the larger world

In an effort to curb anticipated shortfalls, the U.S. Postal Service may discontinue Saturday delivery service, cut down on overtime, raise postal rates, and layoff about 30,000 of its 596,000 employees. According to a new article on Reuters.com, USPS chief financial officer Joseph Corbet made that announcement just hours ago.

The recent proliferation of private delivery companies and the surging popularity of electronic communications are expected to reduce the volume of first class mail in 2010 by 10 billion pieces. By 2020, mail volume is expected to drop by 37 percent, leaving the UPSP with a potential revenue shortfall of $238 billion by that time. No level of debt management would make so much as a dent in a shortfall like that.

Losses, losses, and more losses

The postal service has been reporting net losses since 2007. Last month it reported a loss of $297 million for the first quarter of its fiscal year. The competition created by FedEx and United Parcel Service, along with the increasing number of grocery stores and other retail establishments that now sell postage stamps and mail-related services, could soon cause post-office buildings to start boarding up.

Retiree health benefits

To make matters worse, according to the Reuter’s article, the Postal Service has warned that it may be unable to make cash payments of $6.6 billion this coming fall required to cover workers’ compensation liabilities and to fund retiree health plans. Similar payments were restructured by Congress last year, but there are no assurances that the same legislative leniency will be forthcoming this year.

PRC chair Ruth Y. Goldway

Postal Regulatory Commission (PRC) chair Ruth Y. Goldway does not favor discontinuing Saturday mail service. According to a recent post on CBSnews.com, Goldway believes that cutting Saturday delivery would threaten the monopoly status of the postal service and undermine “the vitality of the mail system.”

Postmaster General John E. Potter

Possibly as a strategy to obtain other concessions, Postmaster General John E. Potter is pushing to eliminate Saturday service. CBSnews.com suggests that Potter may believe Congress and the PRC are more likely to relieve the USPS from its government-mandated obligations to provide health benefits for retirees rather than agree to a reduction in service days.

Postal customers

One thing is virtually certain: There will be another round of postage rate increases. Legal loopholes allow the USPS to make greater-than-inflation increases in extraordinary situations. The current situation probably qualifies as extraordinary by almost anyone’s definition. When you think about your own bottom line, remember that U.S. postal rates are significantly lower than those in most other places around the world.  By the same token, if you’ll be making any bulk mailings in the near future, the anticipated price hike is one more good reason to keep same day cash loans in mind.

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