No more mail on Saturday?

By RANDOLPH E. SCHMID
Associated Press Writer
WASHINGTON (AP) - The post office is renewing its effort to drop
Saturday delivery - and plans a rate increase - in an effort to
fend off a projected $7 billion loss this year.
Without drastic action the agency could face a cumulative loss
of $238 billion over ten years, Postmaster General John Potter said
in releasing a series of consultant reports on agency operations
and its outlook.
"The projections going forward are not bright," Potter told
reporters in advance of Tuesday's announcement. But, he added,
"all is not lost ... we can right this ship."
As Americans turn more and more from paper to electronic
communications, the number of items handled by the post office fell
from 213 billion in 2006 to 177 billion last year. Volume is
expected to shrink to 150 billion by 2020.
At the same time, the type of material sent is shifting from
first-class mail to the less lucrative standard mail, such as
advertising, Potter pointed out.
And as people set up new homes and businesses, the number of
places mail must be delivered is constantly increasing.
The agency has asked Congress for permission to reduce delivery
days and has previously discussed the need for other changes such
as closing some offices.
Cutting back Saturday home delivery, however, does not mean post
offices would close that day.
There seemed to be concern on the part of Congress that
officials had not looked at all possible options, Potter said,
adding that was part of the reason for the three consultant
studies.
Potter said he would like to see mail delivery cut to
five-days-a-week starting next year.
Later this month, he said, the Postal Service will ask the
independent Postal Regulatory Commission to review its plans for
the service reduction.
Under the law, the agency is not supposed to raise rates more
than the amount of inflation, but there is a loophole allowing for
higher increases in extraordinary situations such as the current
recession and drop in mail volume.
"We intend to use that tool," Potter said.
He said the USPS's governing board is engaged in lively
discussions of rate increases, though he declined to speculate on a
new price. Currently, first-class stamps cost 44 cents. Rates for
other classes vary.
"We need to walk slowly and very, very careful" in raising
prices, Potter said, noting that increases can also drive business
away.
A proposal before the Postal Regulatory Commission has estimated
that increases of 3 percent this year and 10 percent next year
would be needed to get the agency back to break-even.
While suggestions to close local post offices always draw
complaints, Potter said the current system could be improved by
opening more postal facilities in places like convenience stores
and supermarkets. A few Office Depot stores are already doing this,
he said.
The average post office has 600 patrons-a-week, Potter said,
while the average supermarket brings in 20,000 people each week and
is open longer hours and more days.
Only after such new facilities were available would a local post
office close, he said.
Moneysaving ideas considered and dismissed by the consultants
included reducing the efficiency of mail delivery, Potter said.
Currently, the standard is to deliver first-class mail in
one-to-three days, depending on the distance traveled. Reducing
this to two-to-five days could save money by allowing more use of
ground transport, but Potter said it would also reduce the value of
mail use, especially to businesses.
Another possibility would be to ask Congress for a subsidy, but
noting the current financial conditions Potter said "we do not
plan to pursue that." The post office has not received taxpayer
subsidies for its operations since the early 1980s.
Potter said the agency is looking to new types of mail services
to offer but will not seek to get into other types of business,
such as banking, which are offered by many foreign postal services.
The agency has cut its work force from a peak of 800,000 career
employees to currently about 600,000, and Potter said it wants to
use more part-time people in the future. Over the next 10 years
some 300,000 postal workers will become eligible to retire and that
will offer an opportunity to make this change, he said.
A major problem for the agency is a new requirement for an
annual payment of $5.5 billion to prepay expected medical benefits
for retirees. Most businesses handle that cost on a pay-as-you-go
basis and Potter said he is seeking congressional approval for the
post office to go back to that standard.
The consultant reports, costing a total of $4.9 million,
involved volume and revenue forecasts prepared by the Boston
Consulting Group, revenue research by Accenture and a combined
business forecast prepared by Mckinsey & Company.

(Copyright 2010 by The Associated Press. All Rights Reserved.)


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