POSTAL SERVICE OVERHAUL SOUGHT: MAIL AGENCY PROJECTING UP TO $5 BILLION LOSSES OVER NEXT TWO YEARS

Upset by two postal rate increases in six months and discussions of delivery cutbacks, some congressional leaders said Tuesday the mail agency must be overhauled. Postal Service officials, dealing with rising fuel costs and shrinking demand for their services, said they also want new postal laws to make the agency more competitive. “It’s obvious that the ox is in the ditch big time,” said Sen. Fred Thompson, R-Tenn., chairman of the Senate Governmental Affairs Committee. The Postal Service is projecting up to $5 billion in losses over the next two years, even after raising the price of a first-class stamp by a penny, to 34 cents in January. Rates on most other classes of mail, including postcards and advertising, go up July 1. Thompson said Congress must review 30-year-old Postal Service laws and “nothing should be off the table, including the future of the postal monopoly itself.” Postal Board Chairman Robert F. Rider suggested a new classification system for mail services. Under a proposal sent to Congress Tuesday, the agency would maintain its monopoly for basic mail delivery but would have more flexibility with other services. Rider also proposed labor changes that would allow the agency to operate like a private company, including removing a salary cap and changing the employee salary bargaining system. Postmaster General William J. Henderson, who retires this month, predicted that some postal duties will eventually be turned over to private companies. The Postal Service, which delivers 668 million pieces of mail a day, does not receive tax money but operates under government oversight. The July 1 increases were announced last week. Henderson said another round of rate increases, of 10 percent to 15 percent, is being considered and a recommendation may be ready in October.
Increases would take effect sometime in 2002. Sen. Jean Carnahan, D-Mo., said with the multiple increases and discussions of abolishing Saturday deliveries, the Postal Service’s reputation is “badly undermined.” Whatever changes are made, six-day service should continue, she said. The Postal Service is expected to complete a study this summer on the cost of Saturday service, part of a review of agency expenses. Rider said the agency has saved money with hiring freezes and cancellations of building projects. He said the latest rate increases were made “reluctantly” with the service facing losses in excess of $2 billion this year. David M. Walker, U.S. comptroller general, said the agency has serious financial problems and “the answer is not merely to increase rates.” The “deteriorating financial situation calls for prompt, aggressive action,” he told senators Tuesday. Senate Appropriations Committee Chairman Ted
Stevens, R-Alaska, said Congress should not overreact with radical changes. Associations representing interests like banking, business and publishing
called for agency revisions in a letter Tuesday to Henderson’s successor,
who has not been named. “Postal carriers may know the path to every house, but
postal management has lost its way through the changing communication landscape,” the letter said. John Campanelli, president of R.R. Donnelley Logistics, which uses postal services to ship magazines, catalogs and direct mail, was to testify today at a House hearing on the Postal Service. He said rate increases will hurt already financially strapped companies. Copyright © 2001, The Macon TelegraphMACON TELEGRAPH, 16th May 2001