USPS cuts Saturday mail delivery

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.

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