The US Postal Service has shelved plans to abandon Saturday delivery for regular mail, and will now seek to re-negotiate union deals and raise postal rates to find other ways of balancing its books.
The Postal Service had intended to implement the new delivery frequency plan from the week of 5th August, 2013, although package delivery would have continued to be six-days-a-week.
Today USPS bowed to pressure from Congress to continue delivering regular letters on Saturdays.
The Postal Service issued a statement from its Board of Governors, following its meeting today, conceding that legislation passed by Congress to fund government operations until the end of September 2013 “has prohibited implementation of a new national delivery schedule for mail and packages”.
USPS said it had “no choice” but to put its plans on hold considering last month’s Continuing Resolution from Congress.
The statement from the USPS governors said: “Although disappointed with this Congressional action, the Board will follow the law and has directed the Postal Service to delay implementation of its new delivery schedule until legislation is passed that provides the Postal Service with the authority to implement a financially appropriate and responsible delivery schedule.”
USPS said it will continue to press for the ability to move to a five-day-a-week delivery schedule for ordinary mail, stating that the move would save $2bn a year in operating costs.
In the mean time, the Postal Service said it will now have to re-open negotiations with the unions to find other ways to cut costs given the “extreme circumstances”.
And, another attempt at an above-inflation postal rate rise could be on the way, USPS said, particularly for products not currently covering their costs – which would refer to Standard Mail Flats (catalogues and similar flat mail) and periodicals, which respectively lost $523m and $670m last year alone.
The Postal Service said: “The Board has directed management to seek a reopening of negotiations with the postal unions and consultations with management associations to lower total workforce costs, and to take administrative actions necessary to reduce costs. The Board has also asked management to evaluate further options to increase revenue, including an exigent rate increase to raise revenues across current Postal Service product categories and products not currently covering their costs.”
Direct mail company Valpak told Congress today that $8.1bn out of the $9bn USPS operating losses (not including healthcare prefunding and workers’ compensation payments) since 2006 have come from “underwater” products like Standard Mail Flats and Periodicals.
Congressional watchdogs at the Government Accountability Office came out at the end of last month to state their belief that the Postal Service doesn’t have the powers to drop Saturday mail delivery under current laws.
USPS said it will be pushing for Congress to provide it with the ability to establish an “appropriate national delivery schedule” within postal reforms currently being developed.
A significant portion of Congress – particularly on the Democrat side – opposes the loss of Saturday mail delivery, concerned about the impact on service levels, mail volumes and jobs.
Today the Senate Government Affairs Committee chairman, Tom Carper, noted the USPS move to delay its “controversial” proposal for five-day mail delivery, but said there was still an “urgent need” for lawmakers in Washington to get together to save the Postal Service.
“While there may be differences of opinion about how best to solve the Postal Service’s financial problems, we should all embrace the goal of enacting legislation that leaves the Postal Service stronger than it is today and better able to navigate through the difficult times it likely has ahead of it,” said the Democrat from Delaware, who last year supported a two-year moratorium on abandoning Saturday mail deliveries.
House Oversight chairman Darrell Issa, who supports the move to five-day mail delivery, said he was “disappointed” that USPS was backing off from its plan for the summer, and blamed the “setback” on political lobbying.
He said: “This reversal significantly undercuts the credibility of Postal officials who have told Congress that they were prepared to defy political pressure and make difficult but necessary cuts.”
President Obama announcing his 2014 Budget today. The White House backs five-day delivery, and also wants to provide some short-time financial help for USPS
Coinciding with the USPS announcement, the White House issued a new 2014 Budget today, which included support for USPS to abandon Saturday deliveries even faster than its 5th August plan, perhaps as early as June.
The proposal offers “flexibilities that will allow the Postal Service to realign its business plan to better compete in the changing marketplace of increasingly digital communication, including provisions that enable the agency to reduce its costs and increase its revenues.”
The White House said its proposed reforms would cut postal operating costs by more than $23bn over 10 years.
The proposed 2014 Budget also includes short-term financial relief for USPS, with pension surplus money handed back (between $2.6bn and $11.5bn depending on who is estimating it), while a restructuring of the Postal Service’s health benefits pre-funding would mean USPS paying $10.6bn less than it would have been required to do in 2013 and 2014.
As of 2012, calculation of retiree healthcare liabilities would be based on actuarial assumptions and better reflect the substantial cut to the workforce seen since 2006, according to the Budget.
However, the Postal Service could be required to pay more in future years under the plan, including defaulted payments.
Previous budgets from President Obama have included similar promises on postal reforms, only to flounder in Congress.