Post office may need to cut delivery days

By Randloph E. Schmid

WASHINGTON – Massive deficits could force the post office to cut out one day of mail delivery, the postmaster general told Congress on Wednesday, in asking lawmakers to lift the requirement that the agency deliver mail six days a week.

If the change happens, that doesn’t necessarily mean an end to Saturday mail delivery. Previous post office studies have looked at the possibility of skipping some other day when mail flow is light, such as Tuesday.

Faced with dwindling mail volume and rising costs, the post office was $2.8 billion in the red last year. “If current trends continue, we could experience a net loss of $6 billion or more this fiscal year,” Postmaster General John E. Potter said in testimony for a Senate Homeland Security and Governmental Affairs subcommittee.

Total mail volume was 202 billion items last year, more than 9 billion less than the year before, the largest single volume drop in history.

Despite annual rate increases, Potter said 2009 could be the first year since 1946 that the actual amount of money collected by the post office declines.

“The ability to suspend delivery on the lightest delivery days, for example, could save dollars in both our delivery and our processing and distribution networks,” Potter said.

A study done by George Mason University for the independent Postal Regulatory Commission estimated that to five-day delivery would save the post office more than $1.9 billion annually, while a Postal Service study estimated the saving at $3.5 billion.

That doesn’t mean it would happen right away, Potter noted, adding that the agency is working to cut costs and any final decision on delivery changes would be made by the postal governing board.

The Postal Service raised the issue of cutting back days of service in a study it issued last fall. At that time the agency said the six-day rule should be eliminated, giving the post office, “the flexibility to meet future needs for delivery frequency.”

The next postal rate increase is scheduled for May, with the amount to be announced next month. Under current rules that would be limited to the amount of the increase in last year’s consumer price index, 3.8 percent. That would round to a 2-cent increase in the current 42-cent first class rate.

The agency could request a larger increase because of the special circumstances, but Potter believes that would be counterproductive by causing mail volume to fall even more.

Dan G. Blair, chairman of the Postal Regulatory Commission, noted in his testimony that cutting service could also carry the risk of loss of mail volume. He suggested Congress review both the delivery and restrictions it imposed on the closing of small and rural post offices.

The post office’s problem is twofold, Potter explained.

“A revolution in the way people communicate has structurally changed the way America uses the mail,” with a shift from first-class letters to the Internet for personal communications, billings and payments.

To some extent that was made up for my growth in standard mail, but the economic meltdown resulted in a drop there also.

“We are in uncharted waters,” Potter said. “But we do know that mail volume and revenue – and with them the health of the mail system – are dependent on the length and depth of the current economic recession.”