While monumental measures are being introduced to cut costs for the United State Postal Service, there will be little or no noticeable change in this area in the immediate future.
On May 17, the U.S. Postal Service announced plans to move ahead with a modified plan to consolidate its network of 461 mail processing locations, in phases. The first phase of activities will result in up to 140 consolidations through February of 2013. They added that, unless the circumstances of the Postal Service change in the interim, a second and final phase of 89 consolidations is currently scheduled to begin in February of 2014.
“We revised our network consolidation timeline to provide a longer planning schedule for our customers, employees and other stakeholders, and to enable a more methodical and measured implementation,” said Patrick R. Donahoe, Postmaster General and chief executive officer of the USPS.
“We simply do not have the mail volumes to justify the size and capacity of our current mail processing network. To return to long-term profitability and financial stability while keeping mail affordable, we must match our network to the anticipated workload,” said Donahoe. “Our current plan meets our cost reduction goals, ensures seamless and excellent service performance throughout the implementation period, and provides adequate time for our customers to adapt to our network changes.”
U.S. Sen. Tom Carper, (D.Del.), chairman of the subcommittee that oversees the U.S. Postal Service and co-author of the 21st Century Postal Service Act, responded by saying the new plan still was not quite enough.
“Today’s announcement comes a week after the Postal Service announced that it lost a staggering $3.2 billion in the second quarter of Fiscal Year 2012. In fact, the Postal Service is hemorrhaging money at a rate of at least $25 million a day and is on track to lose far more over the course of this fiscal year,” he noted.
“Given these dire circumstances, it shouldn’t come as a surprise that the Postmaster General is moving forward to reduce costs with the limited tools at his disposal, but the reality is that efforts of this scale are not enough to fundamentally fix the Postal Service’s financial problems.”
The Senate passed a postal reform bill in April that would give the Postmaster General access to money USPS has overpaid into one of its retirement funds, allowing it to provide incentives to encourage 100,000 eligible employees to retire; and reduce the amount of money that USPS has to prefund for retiree health benefits by amortizing the costs over 40 years and calculating those costs more appropriately.
The bill also moves to retain overnight delivery of first-class mail, but limits it in some cases to shorter geographic distances; prevents the Postal Service from reducing service to five-days-a-week delivery for at least two years and requires it to exhaust all other cost-saving measures first; and allow USPS to ship beer, wine and distilled spirits, among other things.
However, Carper said, the House has yet to act.
Donahoe said that the Senate bill that passed doesn’t go far enough, falling short of the cuts found in the Postal Service’s own plan.
“Given volume losses we have experienced over the past five years, along with expected future trends, it is totally inappropriate in these economic times to keep unneeded facilities open. There is simply not enough mail in our system today. It is also inappropriate to delay the implementation of five-day delivery when the vast majority of the American people support this change. Failure to act on these changes will ensure that the Postal Service’s losses will continue to mount.
“We appreciate the hard work of the Senate in addressing postal issues,” he added, “and we believe that there are important and valuable provisions contained in the legislation. We would have preferred the Senate allow the Postal Service to move further and faster in addressing its cost-reduction goals.”
Earlier in May, according to Ray Daiutolo of corporate communications for the USPS, they announced a new strategy that could keep the nation’s smallest post offices open for business, while “providing a framework to achieve significant cost savings as part of the plan to return the organization to financial stability.”
That plan would keep all the existing post offices in place, but with modified retail window hours to match customer use. According to Daiutolo, access to the retail lobbies and to post office boxes would remain unchanged, and the towns’ ZIP code and their related community identities would be retained. The new strategy would result in some offices staying open with reduced hours.
Only two offices in Sussex County are being considered for that kind of reduced operation: Ellendale (cutting from eight hours to six) and Bethel (cutting from eight hours to four). All others are set to remain operating as they do today.
The Dagsboro post office had cut its operation hours a few years ago, from eight to six. In addition, area post offices consolidated their processing work a few years back, so local mail is now sorted, delivered and dispatched from Roxana. The local post offices have remained open as retail offices and for packages.
As of the end of May, there are no additional consolidations planned for Delaware, although there are three in Maryland and about 10 planned in Pennsylvania. In total, there are 461 mail processing locations in the country that will be consolidated in two phases over the next two years.
The Postal Service explained that they will begin consolidating operations this summer – which mostly involves transferring mail-processing operations from smaller to larger facilities, a step already taken in this area. They said the consolidating activities will reduce the size of the Postal Service workforce by approximately 13,000 employees and, when fully implemented, will generate cost reductions of approximately $1.2 billion annually.
“Given that the Postal Service is currently projecting a $14 billion net loss in FY2012, and continuing annual losses of this magnitude, we simply cannot justify maintaining our current mail-processing footprint,” said Donahoe.
When fully implemented in late 2014, the Postal Service expects its network consolidations to generate approximately $2.1 billion in annual cost reductions, and lead to total workforce reduction up to 28,000 employees.
The list of 140 mail-processing locations to be consolidated by February of 2013 is available online at http://about.usps.com/news/electronic-press-kits/our-future-network/welc....
Today, the Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.