USPS cuts Saturday mail delivery

But is the move too little too late for the cash-strapped agency?

By Jonathan Berr Feb 6, 2013 11:22AM
Image: Mailbox (Corbis)Updated 10:45 a.m. ET

The U.S. Postal Service has delivered a message that should surprise few people: Saturday mail delivery is coming to an end.

The USPS will curtail the service effective Aug. 5, expecting to save $2 billion annually. Sadly, that won't be enough to address its financial woes. The service lost $15.9 billion in the last fiscal year, three times its loss from a year earlier. 

"It's a responsible decision. It makes common sense," said Postmaster General Patrick Donahoe, according to CNN.

Package delivery, which is profitable, will continue on Saturdays. The move would affect 22,500 jobs, and Donahoe says he can achieve it without layoffs.

The USPS has sought to end six-day delivery for years, though some have argued that it would harm residents in rural areas. Credit card and insurance companies have said that they need Saturday delivery because they need to notify their customers frequently.

One postal union denounced the move as short-sighted.
 
"USPS executives cannot save the Postal Service by tearing it apart," according to a statement from the American Postal Workers Union. "These across-the-board cutbacks will weaken the nation’s mail system and put it on a path to privatization."

There are many reasons for the service's fiscal mess. Congress has mandated that the USPS pre-fund 75 years of its retiree health care costs, an expense that is expected to top $100 billion by the end of the decade. The burden, which no other public or private sector employer faces, is crushing the USPS, which defaulted last year on more than $10 billion in payments needed for future retiree health costs. Some USPS critics, though, have argued that the prepayment issue is overblown.

Indeed, demand for mail service has plummeted for years. First-class mail volumes have fallen as more consumers pay bills online and send messages over email. Fewer than half of the nation's 32,000 post offices are profitable because demand from customers has fallen. The USPS is slashing the number of mail processing centers by more than 50% by 2014.

Ironically, the USPS has recently touted that it was named the most trusted government agency for the for the seventh year in a survey by Ponemon Institute. It would be interesting to see how USPS would fare in light of Wednesday's announcement.
 
Follow Jonathan Berr on Twitter @jdberr.

More on moneyNOW


27Comments
Feb 6, 2013 1:23PM
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Junk mail should cost as much as a first class letter.  Also end discounts for charities, etc.  All pay first class rates.  It would cut all the junk mail I get and return profit to the taxpayers.
Feb 6, 2013 1:29PM
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Why haven't they eliminated the advertiser's mail rate? Junk mail costs more to handle than they get to deliver it. Eliminate Bulk Mail. The Saturday delivery deal isn't a milestone, just a stone.
Feb 6, 2013 2:27PM
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Not a problem. I just hope congress does not get in the way. It's government involvement that has caused most of the problems.
Feb 6, 2013 2:32PM
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Would have been a great thing if started about ten years ago, now not so much. Grumpy employees who did not seem to give an iota about customer satisfaction. Affirmative action also played a huge part, instead of hiring and promoting the most productive employees, they were forced to cater to those who might, maybe, possibly want to do their jobs. It is not just the USPS, it is a virus among all federal worker programs. 
Feb 6, 2013 2:52PM
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Oh, big shock, the postal worker's union is objecting!!!  Of course, that's the only way they make their money if those people keep working.  Just like the auto workers, they were going to have to pay a small copay for dr. visits,like $5-10, much smaller than most of us normal working people have to pay, and the union was ready to strike!!!!!  As much as these guys screw up, they've made there own nest, deal with it!!!
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It's unfortunate, but this makes sense. There is so little legit mail, anymore. I would like to have seen them discontinue Wednesday or Thursday  instead, so we wouldn't go two straight days without service, but I'm sure businesses need five day work week service.
Feb 7, 2013 8:37PM
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Return profit to tax payers? FYI - The USPS does NOT use tax payer dollars to fund their business which is why ii is going broke. the organization pays for itself through the stamps, product and services it provides each day. That's a foolish statement on your part, get your facts right before you create a blog here. The USPS is the ONLY federal Agency in the government branch who is mandated to Pre-Fund it's own Retirement Funds Plan, to a tune of 5.5 Billion a year. This also happens to be a part where they can borrow from each year to offset expenses. Unfortunately, there is a cap of 15 Billion they can borrow and they have reached that last fiscal year. Sooooo... they are not allowed to borrow anymore from the Pre-Funded Retirement Plan.

When they conducted an audit a few years ago, the Office Inspector General concluded that the USPS had over paid a whopping 70 Billion into the program which the US Government now has. Now, here's the funny part ... the US Government will not release it back to the USPS because of the fiscal cliff crisis, so they say. 

15.9 Billion loss last fiscal year, yes ... 11 Billion of that was the 5.5 (x2 - FY11 &FY12) mandated Pre-funded Retirement Plan, that the USPS DID NOT pay into.

In closing, the REAL loss was roughly about 3 Billion when you factor in Workman's Compensation etc etc.
Feb 6, 2013 12:02PM
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I would gladly pay higher first class postage rates to maintain the solvency of the USPS, which is, for my money, the best of Government services. In the last 30 years, we have never had a piece of mail lost or misdirected. Package rates have always been a fraction of what the well-known commercial carriers charge.
Feb 6, 2013 5:44PM
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Eliminating Saturday delivery should have been done years ago.  And, all post offices that have an average of 5 customers per day or less, should be closed.  I think the general population would be very surprised at the large number of post offices that the postal service maintains that don't even have customers on some days.  Very inefficient operating procedures and Congress is completely to blame for tying the hands of the Postal Service management.
Feb 6, 2013 4:03PM
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Very sad news.  I already have no mail delivery (live in a small rural town) and now the post office will be closed.  I will never be able to go to the post office now.  They just lost all of my business.
Feb 6, 2013 6:17PM
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Now it`s time for the far right to blame this on Obama.Most Obama haters can`t even spell

his name.

Feb 6, 2013 12:14PM
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The post office lost so many of our wedding invitations it's not even funny. I was so mad! They got sent out and people never received them. Some did but a huge majority did not. A waste of my time and money to have that happen. Sad about no mail Saturday but I am not willing to pay a higher price to those who cant do their job right. I've had other mail never make it either,whether it got lost or stolen I'll never know
Feb 6, 2013 12:13PM
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OUTDATED LIKE PONY EXPRESS ,NEED TO GET UO TO SPEED IN TODAYS WORLD CHANGE SOMETIMES COMES HARD
Feb 6, 2013 1:32PM
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The United States Postal Service is run by republican crooks!  Need proof?  Just demand that all management within the USPS disclose their common stock equity holdings in United Parcel Service (UPS) and Federal Express! My guess is that management within the USPS holds a combined share of 5% of the outstanding shares in UPS and FedEx.  What the USPS REALLY is is a means for republican union-hating greedheads to use government employees to subsidize the package delivery business for publicly traded non-govermental companies under the guise of "last mile" delivery.  UPS and FedEx throws USPS a pittance for the "last mile" delivery of their parcels, which probably doesn't cover the costs to the USPS for providing such a service.  End result: USPS employees are essentially helping the profitability of publicly traded companies UPS and FedEx, who fail to compensate the USPS adequately.  It's "insider trading" in the sense of USPS republican management are using government employees "inside" the USPS to enhance the profits of publicly traded delivery companies!  USPS management should feel free to denounce any accusation of a blatant "conflict of interest" via full disclosure of their current common stock equity positions in UPS and FedEx!  They will plead the Fifth (Amendment of the U.S. Constitution)!
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