Postal Panic: USPS Board Seeks to Scratch a Delivery Day

Washington—By announcing that it wants the U.S. Postal Service to consider stopping Saturday delivery as a cost-cutting measure, the agency’s Board of Governors (BOG) called plenty of attention to the need for postal reform. But in fact, without postal reform, it’s impossible for the USPS to reduce delivery from six days a week to five: The Postal Reorganization Act of 1970, the law that governs the USPS, mandates delivery six days a week.

Mortified that the Postal Service stands to lose up to $3 billion this year, the BOG on April 3 said it wants postal management to explore five-days-a-week delivery. USPS chief financial officer Dick Strasser says that the agency could save up to $2 billion a year by dropping a delivery day, “depending on how it’s structured. But we won’t know that specifically until our operations gets into the nitty-gritty of calibrating it.”

The BOG demand follows last week’s announcement that the Postal Service plans to reduce spending by $2.5 billion by 2003, to cut 75,000 work-years by 2006, to reduce administrative costs 25%, and to reduce transportation costs 10%. Earlier this month, the BOG told postal management to immediately freeze capital construction commitments, which affected more than 800 postal facilities.

The USPS blames the red ink in part on labor costs, fuel costs, and falling first class mail volume due to electronic alternatives. But the agency reserves most of the blame for the lack of a modern law to give it more pricing flexibility.

“The reality of the marketplace is that the 30-year-old statutory model that governs the Postal Service is in need of change to protect universal service at affordable rates,” BOG vice chairman David Fineman said on announcing the delivery-reduction proposal.

Despite several bills introduced in Congress during the past five years, postal reform hasn’t come anywhere near passing. But the BOG and USPS management have been outspoken lately in their cries for reform legislation. The last postal reform bill, H.R. 22, failed to get to the floor of the House in the last Congress. No bill has yet been introduced this year, although mailers and the USPS itself have called on President Bush to initiate a presidential commission to evaluate the future of the agency.

While the announcement made headlines and alarmed mailer groups, some feel that it fell short of effectively promoting the need for reform. “The announcement fails to focus attention where it’s desperately needed,” said Robert McLean, executive director for The Mailers Council, an Arlington, VA-based trade group.

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