The Postal Service’s financial hardships continued in the first quarter of this fiscal year as the agency waits for Congressional action to address its mounting debt. The U.S. Postal Service ended the first three months of its 2013 fiscal year (Oct. 1 – Dec. 31, 2012) with a net loss of $1.3 billion. Continued growth in shipping and package revenue (+4.7 percent) and increased efficiency helped mitigate but could not fully offset the financial effects of continued First-Class Mail volume declines and costs that are beyond Postal Service management control.
As a result, the Postal Service announced last week that it would move forward with accelerated cost-cutting actions necessary to help maintain liquidity because Congress has not passed comprehensive postal reform legislation.
The first quarter is traditionally the Postal Service’s strongest financial quarter, mainly due to the holiday mailing and shipping season. The Quarter One results were also aided by growth in Standard (advertising) Mail during the months leading up to the election. The holiday season resulted in a strong increase in competitive package volume as customers took advantage of Postal Service Priority Mail flat rate pricing and increasingly turned to the Postal Service for last-minute delivery.
With the total mail volume being recorded at 43.5 billion pieces down from 43.6 billion for the same period last year, agency officials informed members of the Postal Board of Governors who oversee the agency, that in order to speed up measures to cut costs, the post office will be suspending Saturday mail delivery in August of this year.
The new delivery schedule is expected to go into effect during the week of Aug. 5, 2013 and calls for package delivery Monday through Saturday, and mail delivery Monday through Friday. By stopping Saturday mail delivery, the Postal Service expects to generate cost savings of approximately $2 billion annually, once the plan is fully implemented.
“The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America’s changing mailing habits,” said Patrick R. Donahoe, Postmaster General and CEO. “We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings.”
Locally, County Commission Chairman Kevin Corbin said he believes the new schedule will be hard to adjust to, but is necessary. “It sounds like we will have to adjust to the new schedule,” said Corbin. “Every aspect of our government should live within its means, so if this is what the Postal Service needs to do to balance their budget, so be it. It will certainly be an adjustment for us not be getting Saturday mail. In the long run, we may just need to mail it earlier, order it earlier, or accept that it may take one more day.”
Senator Jim Davis said that the change is one that citizens will have to get used to in order to ensure that the federal government can adequately continue to sustain the entire industry.
Dorothy Pearsons took to Macon County News' facebook page to voice her concern with the Postal Service's decision. “They should cut their budget elsewhere and continue to run,” wrote Pearsons. “The [slogan] use to be rain, hail sleet or snow, the mail must go. I think it should still go.”
Others, such as Will Peoples and Linda Rae Quinn supported the suspension of Saturday delivery and believe that there will be little effect on residents.
In addition to the new schedule, the Postal Service is currently implementing major restructuring throughout its retail, delivery and mail processing operations. Since 2006, the Postal Service has reduced its annual cost base by approximately $15 billion, reduced the size of its career workforce by 193,000 or 28 percent, and has consolidated more than 200 mail processing locations.
While the change in the delivery schedule announced last week is one of the actions needed to restore the financial health of the Postal Service, the program says that legislative change is urgently needed to address matters outside the Postal Service’s control. The Postal Service continues to seek legislation to provide it with greater flexibility to control costs and generate new revenue and encourages the 113th Congress to make postal reform legislation an urgent priority.
The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.