U.S. Post Office says it will go to 5-day delivery, expects to save $2 billion a year

2/7/2013
NEW YORK TIMES
Postmaster General Patrick R. Donahoe says the U.S. Postal Service will stop delivering mail on Saturdays, but continue to deliver packages six days a week.
Postmaster General Patrick R. Donahoe says the U.S. Postal Service will stop delivering mail on Saturdays, but continue to deliver packages six days a week.

WASHINGTON — Saying it needed to take drastic steps to stem billions of dollars in losses, the Postal Service announced Wednesday it would seek to stop Saturday delivery of letters, a sweeping change in the way the agency operates that immediately drew criticism from postal unions and some businesses.

Randy Warner of Oregon, a longtime postal worker,  has delivered mail on the same route in Northwood for more than three decades.
Randy Warner of Oregon, a longtime postal worker, has delivered mail on the same route in Northwood for more than three decades.

The agency said the change to a five-day mail delivery schedule would occur in August and would save about $2 billion annually.

The Postal Service would continue to deliver packages on a six-day schedule and post offices would continue to be open on Saturdays.

“Our financial condition is urgent,” Postmaster General Patrick Donahoe in announcing the change. “This is too big of a cost savings for us to ignore.”

Mr. Donahoe said the move was part of a five-year plan to return the agency to profitability.

Last year, the Postal Service had a net loss of $15.9 billion. Since 2010, the agency has reduced hours at many small, rural post offices and cut staff, and also announced plans to reduce the number of its mail processing plants.

But post office officials say the cuts and staff reductions are not enough.

The agency long has sought congressional approval to end Saturday mail delivery. But Congress, which continues to work on legislation to overhaul the agency, has resisted.

Under a congressional mandate in place since 1981, the Postal Service is required to deliver mail six days a week.

But post office officials argue that since the government is operating under a stopgap budget measure, known as a continuing resolution, that mandate does not apply, giving them the authority to make the changes without congressional approval.

Rep. Blake Farenthold (R., Texas), chairman of the House Oversight Subcommittee on the Postal Service, called the action a step in the right direction.

But some members of Congress called the Postal Service claim that it had the authority to go to a five-day delivery schedule dubious, setting up a potential showdown between the agency and the congressional committees that oversee it.

“The passage of the continuing resolution did not suspend that language, as they claim, but in fact extended it,” said Rep. Jose Serrano (D., N.Y.), ranking member on the Appropriations Subcommittee on Financial Services and General Government, which also has jurisdiction over the Postal Service.

In April, the Senate passed a bill that provided retirement incentives to about 100,000 postal workers, or 18 percent of its employees, and allowed the Postal Service to recoup more than $11 billion it overpaid into an employee pension fund.

The Senate bill did not stop Saturday deliveries immediately, but it would have allowed the agency to revisit the issue in two years.

The House took no action on its bill and the legislation died in the last Congress. The House bill would have allowed the post office to end Saturday delivery.

House Speaker John Boehner (R., Ohio) expressed his hope that progress would be made on postal overhaul legislation but said that he understood the dilemma facing the Postal Service.

“Congress, in its wisdom, has tied their hands every which way in order for them to actually run the post office in a revenue-neutral way,” Mr. Boehner acknowledged.

Congress is set to begin work on new legislation, but it is unclear when the legislation would be taken up as lawmakers work to avert a series of across-the-board spending cuts scheduled to take place in March.

The post office expects about 35,000 full-time employees across the country will be affected by the elimination of Saturday mail delivery, said David Vanallen, a postal service spokesman.

Mr. Vanallen did not know how many employees in the Toledo area would be affected and said no firm numbers were available at this point.

Terry Grant, Ohio president of the American Postal Workers Union, said the elimination of Saturday mail service will eliminate jobs — a move Mr. Grant said is unnecessary.

“It will cost us jobs in the state of Ohio and the Toledo area,” he said. “I can’t give you a figure yet.”

Mr. Grant said he was extremely dissatisfied that Congress could not come up with a solution that spared jobs and allowed Saturday mail delivery.

Most Americans support ending Saturday mail delivery.

A New York Times/CBS News poll last year found that about 7 in 10 Americans say they would favor the change as a way to help the post office deal with billions of dollars in debt.

The Obama Administration also supports a five-day mail delivery schedule.

But postal unions and some businesses called the move to five-day mail delivery misguided.

“Postmaster General Patrick Donahoe’s plan to end Saturday delivery is a disastrous idea that would have a profoundly negative effect on the Postal Service and on millions of customers,” said Fredric Rolando, president of the National Association of Letter Carriers.

“It would be particularly harmful to small businesses, rural communities, the elderly, the disabled, and others who depend on Saturday delivery for commerce and communication.”

Drug delivery companies like Medco, of Franklin Lakes, N.J., said the change would delay orders for prescription drugs, creating difficulties for patients who need their medications on time.

The move to end Saturday delivery comes as the post office continues to lose money, mainly because of a 2006 law that requires the agency to pay about $5.5 billion a year into a future retiree health benefit fund.

Last year, for the first time, the agency defaulted on two payments after it had reached its borrowing limit from the Treasury.

Packaging is one of the few areas where the agency is seeing growth. The post office has seen its packaging delivery business grow 14 percent since 2010, officials said.

Canada went to five-day delivery in 1969. Sweden and Australia also deliver the mail five days a week. Post offices in Germany offer Saturday delivery for an additional fee.

Blade staff contributed to this report.