Tags: post | office | saturdays

Postal Service May Nuke Saturday Delivery

Friday, 20 Nov 2009 10:32 AM

By Dan Weil

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After losing more than $11 billion over the past three years, the U.S. Postal Service may eliminate Saturday delivery.

The growth of alternative delivery services, particularly Email, and the recession that began last year have cut into the quasi-governmental agency’s revenue.

It delivered 13 percent less mail -- 26 billion fewer pieces – in the year ended Sept. 30 than in the previous year.

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The Postal Service can’t take tax dollars, but it can borrow from the Treasury and now owes the government $10.2 billion.

By law that debt can’t exceed $15 billion. Without major changes, the Postal Service figures it will lose $7.8 billion in the year begun Oct. 1.

That means it does need to make major changes, which is where the idea of dropping Saturday service comes in.

The USPS says such a move could save it $3.5 billion per year. But the Postal Service’s regulator, the Postal Regulatory Commission (PRC), estimates the savings at $2 billion.

In congressional testimony earlier this month, PRC chairwoman Ruth Goldway, urged "caution" before dropping Saturday service. That action could damage "the vitality of the mail system" and eliminate the justification for its mail monopoly, she said.

"From a market perspective, the Postal Service could lose its greatest strategic advantage – ubiquity. Reducing service is detrimental to mail growth and to public perception of the value of the mail system."

The USPS also wants to lower the $5.5 billion in annual payments to pre-fund retiree health benefits that it’s scheduled to make until 2016.

"To say this was a difficult year might be a bit of an understatement," Postal Service chief financial officer Joseph Corbett told reporters last week.

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