Postal Service May Cut Deliveries
Thursday, January 29, 2009
Worsening economic conditions and the changing habits of Americans are threatening to do to the U.S. Postal Service what neither snow, nor rain, nor gloom of night could: stop delivery of the mail, at least for one day a week.
In testimony before a Senate subcommittee yesterday, Postmaster General John E. Potter said the post office may be forced to cut back to five-day delivery for the first time in the agency's history, citing rising costs and an ongoing decline in mail made worse by the global recession. The potential move, which would have to be approved by Congress and postal officials, could mean the elimination of mail on either Saturdays or Tuesdays, the system's slowest days, postal officials said.
"It is possible that the cost of six-day delivery may simply prove to be unaffordable," Potter said, adding that the agency may face a deficit of more than $6 billion in the current fiscal year. "I do not make this request lightly, but I am forced to consider every option, given the severity of our challenge."
The prospect of a shortened delivery week marks the latest setback for the storied post office, which was founded in 1775 with Benjamin Franklin serving as the first postmaster general. It ranks as one of the nation's largest employers, with about 700,000 career employees.
An iconic staple of American life, the post office has been buffeted for decades by shifting cultural and economic challenges and has struggled to modernize its operations. Independent delivery companies such as FedEx have taken over much of the upper-end delivery market, while e-mail and Internet bill-paying services have decreased first-class mail volume. The one bright spot has been third-class advertising mail -- recently renamed "standard mail" -- but that market has also dropped off because of the economy.
"A lot of people look for the postman every day," said A. Lee Fritschler, a former chairman of the Postal Regulatory Commission and a public policy professor at George Mason University. "The Postal Service will tell you that they are a community service. . . . I think a lot of people will wonder what happened to their mail on Tuesday or Saturday if it doesn't come anymore."
The number of items the post office delivered last year dropped by more than 9 billion, to 202 billion items, marking the largest annual decrease in history, officials said. The current fiscal year could also be the first time since 1946 that the amount of money collected by the Postal Service declines from the year before, Potter said.
As a result, last year's deficit of nearly $3 billion could more than double this year. A recent study by Fritschler and other researchers found that eliminating one day of delivery would save the post office more than $1.9 billion a year; the post office estimated savings of $3.5 billion in its own study last fall.
But Dan G. Blair, the regulatory commission's current chairman, also testified yesterday that cutting back a delivery day could further accelerate declines in mail volume, and said that other steps, such as post office closures, should also be considered.
Long a Cabinet-level office, the post office was transformed in 1971 into an independent, quasi-governmental agency that relies on postage and other revenues to meet annual expenses of nearly $80 billion.
There are several hurdles to eliminating a day of mail delivery. First, Congress would have to be persuaded to remove a requirement attached to appropriations bills since 1983 that bars the postal service from cutting back to five days. Then, a reduction would have to be approved by the Postal Service's board of governors, Potter said.
Potter stressed that the post office has already taken dramatic steps to control costs, including $1 billion a year in cuts since 2002, reducing its workforce by 120,000 employees and stopping most construction. He also wants Congress to loosen requirements for advance payments into a retiree health fund, which consumed nearly $6 billion last year.
Postal experts note that the service has previously threatened other types of cutbacks, such as talk in the 1990s of eliminating or scaling back window services, only to retreat. The service has recently floated the notion of a five-day delivery week, but it has never been put forth as explicitly as it was yesterday. The Postal Service may also soon ask for another increase in the cost of a first-class stamp, which is now 42 cents.
Officials with the American Postal Workers Union did not respond to messages yesterday requesting a response to Potter's remarks.
Aside from the impact on postal employees, cutting a day could also have a dramatic effect on weekly magazine publishers, direct-mail firms and other businesses that rely on the mail.
Scott Couvillon, president of marketing and product development for Dukky, a direct-mail firm, said the loss of a day could affect retailers' promotional efforts. Household products and grocery coupons are generally targeted for delivery early in the week, while consumer electronics retailers send out promotions later in the week, he said.
He also predicted that any postal service cutback would result in more junk mail for consumers on the days when there are deliveries.
But Bonnie Carlson, president of the Promotion Marketing Association, a trade group, said that while a reduction could drive some businesses to e-mail and other media, the overall impact would be minimal. "I don't see that as having a huge sea change in the world of marketing for retailers," she said.
For much of its early history, the post office delivered mail seven days a week, including twice-a-day stops in some cities. The switch to six-day service came in 1912, when the agency eliminated Sunday delivery because of objections from Christian groups.
Robert Cohen, a former Postal Regulatory Commission official who oversaw the technical analysis for the GMU study, said that the U.S. mail was once a dominant means of communication, but that its influence has steadily declined over the past century. With the recent decrease in business correspondence and other first-class mail, he said, "the post office is now primarily a broadcast medium relaying advertising from businesses to households."
"The bottom line is that the future of the Postal Service is in doubt," Cohen said. "How long it will be able to meet all of its obligations is uncertain."
Staff writer Ylan Q. Mui and research editor Alice Crites contributed to this report.