USPS to delay post office, mail plant closures until May

The US Postal Service took a decision today to freeze all post office and mail plant closures and consolidation until May 2012. USPS was responding to calls from dozens of Congressmen to hold off on its radical downsizing, in order to give the lawmakers more time to find legislative solutions to the multi-billion dollar hole in the Postal Service finances.

Under plans submitted to regulators last week, USPS aims to slow down First Class Mail so that the current network of 461 mail processing plants can be reduced to less than 200, to respond to the 20% decline in mail volumes seen in the last five years.

The Postal Service is also in the process of reviewing around 3,600 post offices for possible closure.

Today, USPS issued a statement confirming that it will “delay the closing or consolidation of any Post Office or mail processing facility until May 15, 2012”.

A spokesman for the Postal Service told Post&Parcel this afternoon that the delay was only applicable to the actual closure of facilities, explaining that efforts to review facilities for possible closure would continue.

Dave Partenheimer said the process of seeking an Advisory Opinion from the Postal Regulatory Commission to revise mail service standards would also continue. USPS filed its request with the Commission last week.

“Today’s decision will not affect that process,” said the USPS spokesman. “There will be no closing of processing plants until May, but the study process will continue, including community input meetings for post offices and for the mail processing plants, they were not going to close until the spring, so there will not be major changes to that schedule.”

The changes to USPS service standards, as filed last week, face a three-month review by the Postal Regulatory Commission before they can be implemented. Executives told reporters last week that it was therefore unlikely that any changes to service standards would be seen before April 2012.

Last month, the US Postmaster General said none of the postal reform proposals currently progressing through Congress did enough to save the Postal Service, and warned that the slow pace within Congress meant USPS was in a race against time to make changes before it runs out of cash next October.

Thanks to declining mail volumes and pension pre-funding mandates set by Congress in 2006, USPS is currently on track to make annual losses in the region of $10bn and more each year, and already has a debt of around $15bn, the upper limit of its legal borrowing power.

Partenheimer told Post&Parcel today that he could not say what extra cost the extended moratorium on facility closures would mean for USPS. However, he added: “We still need to rightsize our network based on the mail volumes we are seeing, we have a network that is too large, we need to continue to study both the retail network and the mail processing facilities so that we can have an optimal sized network.”

Congress demand

The USPS announcement came today in response to a letter from 18 members of the Senate, urging Senate leaders to impose a six-month moratorium on closing mail plants and post offices, to allow time for Congress to complete its role in major postal reforms before radical changes are made to US mail services.

“As the U.S. Postal Service takes steps to turn its financial situation around, it is important that it take into consideration the needs of rural communities,” said one of the signatories, Senator Amy Klobuchar of Minnesota. “I believe we need to enact reforms to help the Postal Service adjust to a digital world and recognize the concerns of rural communities.”

Senator Claire McCaskill, who was also among the 18 Senators calling for the moratorium, said today:  “I’m glad that we have convinced the Postal Service to put the brakes on closing any post offices for six months so that we have time to enact reforms for the long-term health of the postal service and protect communities.  I’ll remain devoted to ensuring the Postal Service acts with full transparency and fairness as they make decisions that impact services in Missouri.”

Today also saw 38 members of the House of Representatives writing to the US Postmaster General to strongly oppose plans to close around 252 mail processing centres across America, and change First Class Mail from a one-to-three day service into a two-to-three day service.

“The changes may provide short-term relief, but ultimately it would be penny wise and pound foolish because it would push more businesses onto the Internet,” said the Congressmen in the letter, adding that the changes to USPS service could particularly hit vulnerable groups reliant on the mail, such as the elderly.

New York Congressman Maurice Hinchey and several of his colleagues also today introduced new postal reform legislation in the House, which would prevent USPS from abandoning Saturday deliveries to save money, and hand the Postal Regulatory Commission stronger powers to block attempts to close post offices.

The legislation proposal would also allow USPS access to billions in pension surpluses – both in its federal and civil service retirement funds – and allow the Postal Service more freedom to provide non-postal services.

“The Postal Service is considering laying off nearly 25,000 workers, eliminating the Saturday delivery of mail and increasing the time it takes to receive a letter from two to three days,” said Hinchey. “These are changes that would have a negative effect on our economy, and Congress needs to take action now to alleviate the financial crisis the Postal Service faces. The Postal Service Protection Act would accomplish that goal.”