US Mail Slows Down

Posted on Dec 12, 2011 in Blog, Direct Marketing, News | 0 comments

It’s already called “snail-mail” but U.S. Postal Service will be slowing down even further. As more and more business is going online, US. Postal service faces bankruptcy.

U.S. Postal Service says it will save $3 billion a year as 252 of the nations 461 mail processing centers close next spring, that will eliminate roughly 28,000 jobs. That means first-class mail will have to travel farther and will arrive in two to three days instead of one to three.

The consolidation of mail processing centers is in addition to the planned closing of about 3,700 local post offices. In all, roughly 100,000 postal employees could be cut as a result of the various closures, resulting in savings of up to $6.5 billion a year.

Expressing urgency to reduce costs, Postmaster General Patrick Donahoe said in an interview that the agency has to act while waiting for Congress to grant it authority to reduce delivery to five days a week, raise stamp prices and reduce health care and other labor costs.As more people pay bills online, the Postal Service has been losing 7% of its first-class business, which accounts for half its revenue, every year for three years, Donahoe said.

Postal vice president David Williams said the agency wants to virtually eliminate the chance for stamped letters to arrive the next day to help avert possible bankruptcy next year. Williams said the postal service is not “writing off first class mail,” but it must respond to new market realities in which people are turning more to the Internet for email communications and bill payment.

Technology has shifted the equation again

From Pony Express on the Boston Road, to mail carriers in every town,  and “Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds”….but the internet has made the effort moot.  And slowing down the mail will push more and more people to use the internet, as a faster solution to conveying their mail.pony express mail

“Unprecedented cuts by the cash-strapped U.S. Postal Service will slow first-class delivery next spring and, for the first time in 40 years, eliminate the chance for stamped letters to arrive the next day”, as reported by Hope Yen, Assoc. Press.

Here are the current mail statistics:

  • About 42 % of first-class mail is now delivered the following day
  • another 27 percent arrives in two days
  • about 31 percent in three days
  • less than 1 percent in four to five days.

With the change next spring:

  • about 51 percent of all first-class mail is expected to arrive in two days
  • with most of the remainder delivered in three days.

Ruth Goldway, chair of the Postal Regulatory Commission, said the planned cuts could test the limits of the Postal Service’s legal obligation to serve all Americans, regardless of geography, at uniform price and quality.”It will have substantial cost savings, but it really does have the potential to change what the postal service is and its role in providing fast and efficient delivery of mail,” she said.

But can we blame it all on the coming of the digital era?

Some say that Congress can help ease the financial shortfall by fixing what some union leaders and the Postal Service believe is a multibillion-dollar overpayment into employee pension and retiree health care funds.

There are some who blaming Congress and that the deficits the Postal Service has been running are attributable to three related accounting issues:

  • the overly ambitious pre-funding schedule of retiree health benefits mandated by Congress in the 2006 Postal Accountability and Enhancement Act (PAEA)
  • the over-funding of both the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS)
  • the methods used to determine potential liabilities due to workmen’s compensation.

Congress passed the Postal Accountability and Enhancement Act of 2006 (PAEA). Under PAEA, USPS was forced to “prefund its future health care benefit payments to retirees for the next 75 years in an astonishing ten-year time span” — meaning that it had to put aside billions of dollars to pay for the health benefits of employees it hasn’t even hired yet, something “that no other government or private corporation is required to do.”

As consumer advocate Ralph Nader noted, if PAEA was never enacted, USPS would actually be facing a $1.5 billion surplus today: By June 2011, the USPS saw a total net deficit of $19.5 billion, $12.7 billion of which was borrowed money from Treasury (leaving just $2.3 billion left until the USPS hits its statutory borrowing limit of $15 billion). This $19.5 billion deficit almost exactly matches the $20.95 billion the USPS made in prepayments to the fund for future retiree health care benefits by June 2011. If the prepayments required under PAEA were never enacted into law, the USPS would not have a net deficiency of nearly $20 billion, but instead be in the black by at least $1.5 billion.

The Postal Service already has already announced a 1-cent increase in first-class mail to 45 cents beginning Jan. 22.

So whatever the real story behind the slow down, everyone should be forewarned to plan ahead when mailing bills and payments and think in terms of a 5 day part-time week’s worth of mail being moved by 51% fewer employees, farther distances at a higher price to the consumer. And who knows, some brave entrepreneur may cleverly hop on a Pony for very special Express deliveries and revolutionize the mail system again.

Contact us for all your mailing needs, we can process your mail fast and  efficiently and get it to your destination, on your timeline. Call for a free quote, 866.816.2378 (toll free)

Sources:

 

Hope Yen, Associated Press

Oren Dorell, USA Today

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