When a business is facing $2.1 billion in debt, it’s natural that it will make dramatic changes. The U.S. Postal Service is no exception.
Thus, there should be little surprise that it plans to close or consolidate as many as 677 post offices throughout the country, with approximately 250 set for full closure.
For the U.S. Postal Service, these are dire times – and they are unlikely to get better.
The Associated Press reports that Postal Service lost $5.1 billion in the past year. In 2012, it’s facing a record $14.1 billion shortfall and possible bankruptcy.
The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.
By 2015, the Postal Service must reduce its operating costs by $20 billion, according to David Williams, vice president, Network Operations. As it does this, expect to see changes.
The Postal Service is proposing that the standard for delivering First-Class Mail will become 2-3 days for contiguous U.S. destinations. There’s also talk of eliminating Saturday delivery, but that’s not on the chopping block – yet.
The problem confronting the Postal Service shouldn’t come as a surprise. More and more of us have turned to the Internet to keep in touch with one another and fewer and fewer of us are using the Postal Service to send First Class Mail.
For the Postal Service, that’s a catastrophe. First Class Mail is the biggest money-maker for the Postal Service, but such revenue has fallen 25 percent over the past decade. More and more, mailboxes are filled with “junk mail.”
The Postal Service also has committed self-inflicted wounds: high labor costs. Reports say that salaries and benefits make up about 80 percent of the Postal Service budget. Compare that with FedEx, which reportedly spends 43 percent of its budget on labor, and UPS, which spends 63 percent.
Why are the Postal Service labor costs so high? Big salary increases and no-layoff clauses.
And, let’s not forget the role of Congress in all of this. Though the Postal Service doesn’t get any public dollars, it still is subject to congressional whims. For example, there’s a Senate and House version of a bill dealing with Saturday delivery. Many people are betting that the two houses won’t come to an agreement, meaning that Postal Service problems are likely to continue.
– Craig Groshart, Issaquah & Sammamish Reporter
