Congress: Post offices "not the cause" of USPS financial crisis

Members of the US Congress have been expressing concern about the 3,700 post offices now up for possible closure across the United States. The US Post Office asked for official approval from US regulators yesterday regarding its plans to review 11% of its post offices for possible closure.

Seeking $200m in cost reductions and a response to the 20% drop in mail volumes over the last few years, USPS wants to close 3,650 of the 26,880 post offices and 5,610 stations or branches within its retail network.

Senators Susan Collins and Tom Carper are understood to be currently working on a bipartisan compromise postal reform bill together, but while the Democrat Carper expressed support for the “difficult but necessary step” of closing post offices that are “losing money or are no longer necessary”, the Republican Collins was less enthusiastic.

“The fact is, maintaining our nation’s rural post offices costs the Postal Service less than one percent of its total budget and is not the cause of its financial crisis,” said Collins.

The Senator from Maine added: “While there are some areas where postal services could be consolidated or moved into a nearby retail store to ensure continued access, this simply is not an option in many rural and remote areas.”

Members of congress, who USPS must keep on side if it wants to effect reforms that will save far more money than closing 3,700 post offices, were briefed by Postal Service executives last week about the retail consolidation plans.

The closing of post offices has been among the highest profile of any postal issues among Congressmen, despite the more fundamental problems at the Postal Service, which has been losing more than $8bn a year and now faces the ceiling on its $15bn line of government credit.

Universal service

The Postmaster General Patrick Donahoe suggested to Post&Parcel this week that there is support on Capitol Hill for the “village post office” concept in transferring postal retail functions to local grocery stores or fuel stations. But, it has been made clear this week by US lawmakers that access to services in rural areas is still a particular cause for concern.

A group of Democrat Senators, all serving on the Senate Government Affairs Committee, sent a letter to Postmaster General Donahoe this week warning about the impact of post office closures with 28% of households currently not using the internet for communications.

“Postal mail remains the one universal service connecting American people to commerce, government, news and social and civic institutions,” said Senators Jon Tester, Mark Pryor, Mark Begich and Claire McCaskill, who urged USPS to ensure there was proper community input into the closure review process.

Begich, the Senator from Alaska, said in his home state retail alternatives like kiosks were “simply unworkable” when people relied on post offices to receive important goods.

“In Alaska, we’re not talking about mail from grandma on a daily basis. Post offices in rural Alaska are the lifeblood of villages, handling everything from basic food products to medicines and building materials,” Begich said.

Advisory Opinion

Complying with US law on changes to postal services likely to have a nationwide impact, yesterday saw USPS filing the details of its so-called Retail Access Optimisation initiative with the Postal Regulatory Commission.

With the Advisory Opinion from the Commission set to take around 90 days, and the closure review process around four to five months, closures would not occur until after February 2012.

According to the USPS filing, no post office is to be closed purely for operating at a deficit, though revenue generation is a factor, along with availability of alternative access sites and where there are few hours of operation.

The PRC said today that public hearings will be held to analyze the USPS proposals, and that the Postal Service cannot implement any of its changes until 90 days have passed since yesterday’s filing.

PRC chairman Ruth Goldway said: “The Commission supports the Postal Service’s efforts to become more efficient, but with regard to post offices, significant changes must be done within the framework of the legal requirement to provide universal service.”

The business community is supporting the Postal Service’s effort to streamline its retail network, but industry groups said more comprehensive measures are needed to set the USPS back towards long-term solvency.

And in that respect, action from Congress is needed, pointed out mailing industry lobby group Coalition for a 21st Century Postal Service.

“This is bitter medicine, but changed times call for a changed Postal Service. With mail volumes declining at a dizzying rate, we need a Postal Service that is leaner, more efficient and less expensive,” said Art Sackler, Chairman of the Coalition.

“The Postmaster General and the Postal Service should be commended for tackling this issue. Now, we need Congress to follow suit quickly and enact the reforms necessary to save the Postal Service and the 8 million private sector workers who depend on it,” added Sackler.