Mail industry calls on Congress to give USPS time to right-size

Key US mailing industry groups have called on US lawmakers to act to stabilise the finances of the US Postal Service, and give it time to right-size its network in the face of declining mail volumes. A joint letter was sent to all members of the House of Representatives today, from dozens of USPS customers, suppliers, partners and unions, calling on them to support legislation introduced back in April that would help the struggling Postal Service.

Groups including all major postal unions, the Association for Postal Commerce, Parcel Shippers Association and 54 individual USPS partner and customer businesses warned that the possibility that the USPS could run out of cash later this year “poses an immediate and serious threat to the US economy”.

The Postal Service is on course to make an $8.3bn loss in its current fiscal year, which ends in September. Last year, it reported an $8.5bn loss, but this year it faces a legally-set $15bn limit on its borrowing.

The industry groups urged members of the House to support Congressman Stephen Lynch’s bill (HR 1351), which seeks to return more than $50bn in money overpaid by the Postal Service into its pension funds, which would allow USPS to pay off its annual $5.5bn requirement to pre-fund its healthcare benefit system for future workers.

As it stands, senior USPS executives have said the Postal Service will run out of cash in October. A festive season surge of mail would most likely be able to delay a USPS shutdown until the summer of 2012, but on present course the Postal Service would need Congress to act if it is to survive.

Today’s letter from the mailing industry groups said a crippled Postal Service would threaten universal postal services for 150m homes, along with the $1.3 trillion mailing industry and its 9m workers.

“Despite electronic mail, the USPS handles trillions of dollars of transactions, including payments for more than one half of America’s household bills,” said the letter to Congressmen.

“It is the linchpin in marketing and distribution systems through which businesses large and small can advertise services and distribute products—by itself or as the last mile for delivery by private sector companies.”

While bipartisan support exists in the US Senate for reforming the USPS pension and benefits systems, key committees within the Republican-led House of Representatives have opposed the handing back of massive pension overpayments to the Postal Service.

Lawmakers in the House have in past months less-than-accurately described such a move as a taxpayer-funded “bailout”, which mailing industry experts suggest is an incorrect assessment because the surplus pension funds in question come originally from postal service income, since the USPS is a self-funded agency.

Reforms to infrastructure

The mailing industry groups this week described the Lynch Bill, officially called the Postal Service Pension Obligation Recalculation and Restoration Act of 2011, as a “sensible” way to address some of the key USPS financial problems, though it could not address all the problems.

In their letter, the mailing industry said the Postal Service had “done its job” to help its financial situation through cutting 110,000 jobs since 2007 and by closing or consolidating facilities.

But, it noted that there needed to be more structural reforms of the USPS infrastructure, “though there is little agreement on the scope of the needed reforms”.

The letter was sent to members of the House just ahead of an important hearing tomorrow (June 15) in front of the House subcommittee that oversees the Postal Service. The subcommittee chaired by Republican Congressman Dennis Ross will be examining the state of the USPS infrastructure, posing the question “How Much Can We Afford?”

The letter sent to lawmakers ahead of the hearing pointed out that resolution of the USPS pension and benefits situation would allow time for Congress and the postal community to make the required infrastructure reforms through “sound business decisions”.

“As the nation’s second largest employer with employees and retirees in virtually every community in all 50 states, the Postal Service provides a vital service that is important to the nation’s economic recovery,” said the letter to Congressmen.

“As a business and a public service mandated in the Constitution, a healthy USPS remains vital to your community and the Nation.”