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USPS plans end of Saturday delivery – despite law preventing it

Wednesday, February 6th, 2013

Saturday delivery for US mail other than packages will end in the week of August 5th, 2013, the US Postal Service announced today.

USPS said it was making the plan known in order to give the public and businesses time to adjust to the new delivery schedule.

However, the Postal Service did not provide details about how it will get around its legal mandate to collect mail six days per week. Congressional Republicans suggested today that the next government funding bill, which must be passed before the end of March, could provide an opportunity.

USPS, which recorded a $16bn annual loss last year, said delivering mail only Monday through Friday would save it $2bn a year once the plan was fully implemented.

The strong growth in the Postal Service’s package business, largely thanks to booming US e-commerce, has saved Saturday deliveries for packages. USPS has seen a 14% volume increase in packages since 2010, and forecasts continuing growth.

Mail deliveries to Post Office boxes will also continue to take place on Saturdays, USPS said.

Patrick Donahoe, the Postmaster General, said the new delivery approach responded to the “financial realities” of America’s changing use of the mail.

“We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings,” said Donahoe.

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US Postmaster General said the new delivery approach was developed working with customers

USPS has been required to provide six-day-a-week delivery since 1984, when a clause attached to an appropriations bill set the mandate in return for providing the Postal Service with about $100m in funding for services including mail delivery to the military and assistance for the blind.

Last year the Postal Service failed to persuade Congress to change the appropriations legislation to end Saturday deliveries.

The US Senate – the only chamber of Congress to pass a postal reform bill in 2012 – voted to prevent any change in delivery frequency for at least two years. The US House of Representatives, controlled by Republicans, did express favour for the cost-cutting move, but failed to pass a postal reform bill at all last year.

Today USPS insisted that the American public was on its side in terms of the need to cut Saturday deliveries in order to reduce service costs.

It said independent research suggested that nearly seven out of 10 Americans supported the switch to five-day delivery as a way for USPS to return to long-term financial stability.

USPS, which has already reduced its workforce by 193,000 (28%) since 2006, in the time that mail volumes have reduced by 25%, said it will continue to reduce jobs through attrition as the delivery system changes this August, but workers will also be reassigned.

US postal unions today denounced the plans to eliminate Saturday deliveries, and cast doubt whether USPS had the legal powers to do so.

USPS said today that legislative change was still “urgently needed” to address matters outside the Postal Service’s control, and added that it was seeking legislation to provide greater flexibility, pushing Congress to make postal reform legislation “an urgent priority”.

Losses

An Advisory Opinion issued by the US postal regulator, the Postal Regulatory Commission, in 2011 suggested that USPS would likely save $1.7bn a year by cutting Saturday deliveries, but suggested that such savings would take as much as three years to emerge.

The regulator, which does not have the power to block a major USPS service change, suggested that switching to a five-day delivery week would cost $600m a year in lost postal revenues, three times the estimate of the Postal Service at the time.

However, the Advisory Opinion had been based on a plan that included cutting Saturday delivery for package delivery as well as mail.

Donahoe said today that the plan to keep Saturday package deliveries would mean customers continued to see “strong value” in the USPS national delivery platform.

He said: “As consumers increasingly use and rely on delivery services — especially due to the rise of e-commerce — we can play an increasingly vital role as a delivery provider of choice, and as a driver of growth opportunities for America’s businesses.”

Congress

“It’s hard to condemn the Postmaster General for moving aggressively to keep the lights on at the Postal Service”

In Congress today, Republican leaders expressed support for the USPS plan to eliminate Saturday deliveries.

Darrell Issa, the Oversight Committee chairman in the House, co-authored a letter to Congressional leaders with Senate Ranking Member Tom Coburn to describe the plan to change delivery frequency from 5th August as a “common-sense reform”.

Issa said there was bipartisan support for the measure, as well as backing from the White House.

He suggested that the need for Congress to pass another government funding resolution before the end of March could provide an opportunity to change the appropriations legislation to allow five-day delivery.

“We ask that the six-day mail rider be omitted from any subsequent government funding legislation, enabling the Postal Service to implement this necessary reform without impediment,” said the Congressman from California.

Senate Government Affairs Committee chairman Tom Carper today expressed disappointment at the plan to move to five-day delivery in August.

Carper said he would “much prefer” a move to five-day delivery to take place according to the schedule within the Senate bill passed last year – i.e. after a two-year moratorium.

But he said: “Despite my disappointment, it’s hard to condemn the Postmaster General for moving aggressively to do what he believes he can and must do to keep the lights on at the Postal Service, which may be only months away from insolvency.”

Source: Post&Parcel/USPS

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