WASHINGTON (Emily Stephenson) - The cash-strapped U.S. Postal Service on Monday moved forward with plans to end next-day delivery of letters, postcards and other First Class mail.
Also, in a notice filed with its regulator, it sought approval to close more than half of its 461 processing facilities that have been critical for next-day delivery service.
The agency expects to eliminate about 28,000 jobs as part of the processing facilities plan, said David Williams, USPS vice president for network operations.
The Postal Service, which has been struggling to offset tumbling mail volumes and billion-dollar annual losses, first announced in September that it would study 252 processing sites for possible closure in 2012.
The agency is looking to find $20 billion in annual savings by 2015. It sees reducing its network of post offices and processing plants as key to adjusting as consumers increasingly pay bills online and correspond by email.
Plans to shrink the network would save about $3 billion, officials say.
"The fact of the matter is our network is too big. We've got more capacity in our network than we can afford," Williams told reporters on Monday. "More importantly, we've got to set our network up so that when volume continues to drop, our network is nimble and flexible enough to respond to those volume losses."
The closures would require the Postal Service to adjust its current delivery standards. First Class mail would be delivered in two or three days instead of one to three, with the exception of some pre-sorted mass mailings.
Delivery times for most other more expensive classes of mail, such as Priority Mail and Express Mail, would not change, Williams said. A First Class letter now costs 44 cents.
The Postal Regulatory Commission will study the proposed changes and issue a nonbinding advisory opinion. Williams said the service standards would not change before April 2012.
Williams said the Postal Service's market research found that many customers do not expect overnight delivery of letters sent outside their towns or zip codes.
"They're already choosing speed. They're choosing electronic bill payment, they're choosing electronic communication via the Internet and email," he said.
"Our network is simply too big to handle the revenues that are coming in today but, more importantly, way too big for what we're projecting in the future."
The agency lost $5.1 billion in fiscal year 2011 and is projecting a $14 billion loss this year. The U.S. Congress has twice moved the due date for a $5.5 billion payment USPS says it cannot afford.
USPS has said it will run out of money by September of next year without a congressional overhaul of its operations.
The Postal Service has announced a host of other cost-saving ideas, including studying thousands of post offices for possible closure. The agency has asked for permission to end Saturday mail delivery, pull out of federal health and retirement programs, and other new powers.
Senator Tom Carper on Monday issued a statement calling the Postal Service's attempts to shrink its facilities network "less than ideal" and urged passage of postal legislation.
Committees in both houses of Congress have approved postal bills, but neither full chamber is expected to vote on the issue this year.
Postal officials have called for quick action on postal legislation but said current bills do not go far enough to fix the agency's problems.
(Editing by Mohammad Zargham)
Copyright 2011 Thomson Reuters. Click for Restrictions.
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