USPS wants to branch out

USPS is seeking permission from Congress to enter new lines of business, hoping to boost revenue at a time when traditional mail volumes are posting double-digit losses, putting the Postal Service into a deep financial hole, reports Dow Jones Newswire. The article continues:

A green light from lawmakers could allow 30,000 post offices to offer banking and insurance products, renew drivers’ licenses or sell pre-paid cellular telephone service, offsetting hits from the recession and a shift to electronic bill payment. “We cannot just sell stamps in those outlets,” U.S. postmaster general John Potter said at a Senate Homeland Security and Governmental Affairs subcommittee hearing on 6 August.

While Potter stressed that the Postal Service hasn’t spent a nickel exploring alternative businesses, he said it would do so if lawmakers lift a ban on non-postal business.

“I think we’d be prepared very quickly to test it,” Potter told reporters after the hearing, saying, “there have been enough people knocking on our door,” that the Postal Service would have plenty of options to choose from.

Sales of pre-paid cellular telephone service are one of the ideas that have been pitched, according to Potter, who declined to name the firm or firms that made the pitch.

In addition to looking for new sources of revenue, the Postal Service is aiming to cut costs and obtain short-term relief from a $5.8bn health-care bill that comes due 30 September.

The postal service expects to post a loss of more than $7bn this year and probably won’t have enough cash on hand to cover the hefty pre-payment for retiree health benefits. Congress is looking to provide relief by increasing the Postal Service’s borrowing authority and temporarily lowering retiree health pre-payments. Sen. Thomas Carper, D-Del., chair of the Senate postal subcommittee and sponsor of a bill to ease the Postal Service’s cash crunch, said he wants to give the Postal Service “breathing room” as it considers longer-term changes such as closing postal facilities and moving from six- to five-day-a-week mail delivery.

Potter testified in support of the Senate bill, saying that if Congress doesn’t act in time, the Postal Service will skip some or all of the pre-payments for retiree health benefits. He expressed optimism that the Postal Service will be able to ramp up the payments in five years’ time, helped in part by cost-cutting efforts.

Eliminating Saturday delivery service would save $3.3bn a year and savings would kick in immediately, Potter told the Senate panel. Just 11% of mail is delivered on Saturday and many businesses are closed then, said Potter, making it a good choice as the Postal Service pushes to curtail carrier delivery to five days a week. In another cost-cutting move, the Postal Service has a list of about 675 postal facilities that could be closed, chiefly in cities and suburbs. Potter played down alternatives such as a big increase in postal rates, saying that would “drive mail away,” further depressing revenue.