US Postmaster General insists USPS has "bright future"
US Postmaster General Patrick Donahoe has written to customers insisting that despite “steep and unsustainable” financial losses, the US Postal Service is not going out of business and will not be privatised. Commenting in the wake of media reports in the run up to expectations that USPS will report a $10bn annual loss on November 15, Donahoe insisted “major changes” are taking place to respond to declining mail volumes.
He said the problems related to an “inflexible and outdated” business model within USPS should not be regarded as an indictment of the entire mail communications channel.
The situation is being addressed, he said.
“We are aggressively consolidating and streamlining our operations, negotiating more flexible labour agreements, and reducing the size of our workforce,” he said. “We are also encouraging Congressional efforts to provide the Postal Service with a more flexible and financially sustainable business model.”
Donahoe insisted that a nationwide disruption in mail services was “inconceivable”, and that Congress was “well aware” that such disruption would “paralyse” the US economy.
Even if comprehensive postal reforms are not passed by Congress, he said the Postal Service would ensure operations continued.
However, if Congress allows more flexibility in the way USPS is run, he suggested the Postal Service would “quickly return to profitability and enduring financial stability”. USPS executives believe Congress will pass reform legislation in coming months, despite the sharp divisions within Congress among partisan lines.
“Bright future”
The USPS has delivered 167.6 bn pieces of mail over the past 12 months, and Donahoe insisted that despite the impact of the Internet on First Class Mail, there was a “bright future” ahead for the Postal Service.
Standard Mail volumes have been “largely unaffected” by digital trends, he claimed, adding that First Class-Mail declines are “narrowly attributable to consumer preference to pay bills online and to the weak economy”.
With businesses and consumers still seeing the effectiveness of the mail, Donahoe said the difficult circumstances could be turned around.
“We are radically realigning our mail processing, delivery and retail networks to create a low-cost, technology-centric delivery platform to serve the nation for generations to come,” said the Postmaster General.
“We are aggressively pursuing product and service innovations to drive business growth and to enable businesses to gain a greater return on their investment in the mail.”
The US Senate is expected to mark up a postal reform bill in early November, which could include proposals including some form of a rebate of a $6.9bn surplus in the USPS federal pension fund, a potential restructuring of mandated payments into the USPS fund for future retiree healthcare benefits, and extra flexibility for USPS to expand its product range.
The issue of moving from a six-day to a five-day delivery week, which USPS believes would save $3bn a year, remains controversial in Congress with divisions that do not fall entirely along party lines.
USPS is currently carrying out a major consolidation of its processing network that will see the size of its infrastructure cut by more than half to under 200 processing plants. It hopes to save a further $3bn in the process.
