WASHINGTON (USA TODAY) -- The Postal Service will end Saturday delivery for first
class mail this summer, Postmaster General Patrick Donahue said
Package delivery, which has seen growth in recent years
as online purchasing booms, will continue when the plan is implemented
in August, Donahue said. Donahue said the plan will save $2 billion
"It's an important part of our strategy to return to financial stability," he said.
volume of First Class mail has declined sharply since 2008 as more
people pay their bills on line, Donahoe said. Last year the postal
service had a $15.9 billion loss and defaulted on its pension plan
contributions. USPS has also reached its borrowing limit, he said.
"It's put a tremendous financial pressure on the postal service," he said.
postal service previously had cut costs be eliminating 193,000 jobs and
consolidating 200 mail processing centers. The service cutback will
enable the postal service to cut more jobs, which Donahoe says can be
done through retirements, buyouts and routine attrition.
"We take no tax dollars. We do not want tax dollars," he said.
the new schedule, post office hours will not change and post office
boxes will continue to receive Saturday delivery, Donahoe said. The
postal service expects growth in package delivery as e-commerce expands,
"America's mailing habits are changing," Donahoe said. "This makes common sense."
The six-month lead time will allow businesses to adjust their production and delivery schedules, he said
said surveys indicate the public supports five-day delivery. The plan
should have little impact on speed of delivery except for items that
would have been delivered on Saturday, Donahue said.
under pressure from Congress and local communities, the cash-strapped
agency dropped plans to close thousands of post offices across the
nation, instead deciding to trim operations at 13,000 offices.
Saturday has the week's lowest daily volume and and more than a third
of U.S. businesses are closed Saturday, USPS reports. Most businesses
and households surveyed in a national Gallup Poll indicated Saturday
would be the least disruptive day to eliminate mail delivery.
has faced billion-dollar deficits since 2007 attributed to a
combination of the bad economy, the Internet and mandatory pre-funding
of retiree health benefits.
The agency in November reported an
annual loss of a record $15.9 billion for the last budget year. The
financial losses for the year, which ended Sept. 30, were more than
triple the $5.1 billion loss in the previous year. Last year the agency
was forced to default on billions in retiree health benefit prepayments
to avert bankruptcy.
The agency's biggest problem - and the
majority of the red ink in 2012 - was not due to reduced mail flow but
rather to mounting mandatory costs for future retiree health benefits,
which made up $11.1 billion of the losses. Without that and other
related labor expenses, the mail agency sustained an operating loss of
$2.4 billion, lower than the previous year.
The health payments
are a requirement imposed by Congress in 2006 that the post office set
aside $55 billion in an account to cover future medical costs for
retirees. The idea was to put $5.5 billion a year into the account for
10 years. That's $5.5 billion the post office doesn't have.
other government agency is required to make such a payment for future
medical benefits. Postal authorities wanted Congress to address the
issue last year, but lawmakers finished their session without getting it
done. So officials are moving ahead to accelerate their own plan for
The Postal Service is in the midst of a major
restructuring throughout its retail, delivery and mail processing
operations. Since 2006, it has cut annual costs by about $15 billion,
reduced the size of its career workforce by 193,000 or by 28 percent,
and has consolidated more than 200 mail processing locations, officials
They say that while the change in the delivery schedule
announced Wednesday is one of the actions needed to restore the
financial health of the service, they still urgently need lawmakers to
act. Officials say they continue to press for legislation that will give
them greater flexibility to control costs and make new revenues.