Postal Service Faces 'A New Reality'

There's not much of a market for blacksmiths these days and the  Postal Service is facing up to the harsh reality that the market for its services is also fading fast.

The immediate problem for USPS is a $5.5 billion payment due this month to the postal workers pension fund. There is no money to make the payment and it appears likely USPS will default.

USPS, which admits it is in danger of running out of operating funds early next year, today proposed sweeping changes that it says would save up to $3 billion a year by cutting its network of processing facilities by more than half and adjusting service standards.

No longer realistic

Proposals under consideration include studying nearly 250 processing facilities for possible consolidation or closure, reducing mail processing equipment by as much as 50 percent, dramatically decreasing the nationwide transportation network, adjusting the workforce size by as many as 35,000 positions, and revising service standards for First-Class Mail.

“We are forced to face a new reality today,” said Postmaster General Patrick Donahoe. “First-Class Mail supports the organization and drives network requirements. With the dramatic decline in mail volume and the resulting excess capacity, maintaining a vast national infrastructure is no longer realistic."

Since 2006, Donahoe said the USPS has closed 186 facilities, removed more than 1,500 pieces of mail processing equipment, decreased its employee complement by more than 110,000 through attrition and reduced costs by $12 billion.

Mail volume has declined by more than 43 billion pieces in the past 5 years and is continuing to decline. First-Class Mail has dropped 25 percent and single piece First-Class Mail — letters bearing postage stamps — has declined 36 percent in the same timeframe, and nearly 50 percent in the past ten years.

No more next-day mail

The mail processing network was constructed to process and deliver First-Class Mail within a 1–3 day window depending on where the mail is sent and delivered. With the proposed change, the new service standard would become 2–3 days, meaning that on average, customers would no longer receive mail the day after it was mailed. 

“Our employees continue to do a terrific job for our customers and are among the most dedicated workforce anywhere. These are difficult times and our announcement today does not reflect on their commitment to service,” Donahoe said.