Trump's Fix for Post Office's Deep Losses: Cut Back Saturday Delivery
May 26 2017 - 1:16PM
Dow Jones News
By Paul Ziobro
President Donald Trump's proposed budget would let the U.S.
Postal Service cut back on delivery days, a move that helps the
unprofitable agency save money while putting it at odds with
longstanding congressional demands.
The USPS currently delivers mail six days a week across the
country, while also offering package delivery on Sunday for
internet giant Amazon.com Inc. and others.
The White House budget released last week would let the
quasigovernmental agency scale back delivery frequency "where there
is a business case for doing so." It is one of several solutions
proposed to address the financial struggles at the USPS.
The USPS has posted multibillion-dollar losses each year over
the past decade, largely due to requirements to prefund retiree
health benefits. The White House forecasts annual losses to
continue at around $5 billion
The White House is also pushing for changes to how rates are set
and for more efficient delivery options than going door to door,
like dropping off letters at "cluster boxes" for residents of a
neighborhood or property development.
It estimates the overhauls could improve the USPS's financial
picture by $47 billion over the next decade.
A USPS spokesman said the agency "appreciates that the
president's proposed 2018 budget recognizes the need to enact
postal legislative and regulatory reform. Both are essential to
enabling the Postal Service to meet its obligations in a
financially sustainable manner."
Most of the White House's changes in the budget document fit
with congressional postal overhaul legislation that passed the
House Oversight and Government Reform Committee with bipartisan
support. The legislation also would change how the agency
calculates pension costs and liabilities and would automatically
enroll USPS retirees in Medicare programs.
A Senate postal overhaul bill has yet to be introduced.
But it is the option to reduce delivery days that could set up a
showdown in Congress.
Congress has swatted away several attempts to curb six-day a
week delivery. The USPS, in an attempt to save $2 billion annually,
in 2013 tried to scale mail delivery back to five days a week while
continuing to deliver packages on Saturdays. The proposal met stiff
opposition from postal unions and congressional members and was
dropped.
Annual federal appropriations bills that pay the USPS for free
and reduced rate mailing have long contained language that requires
the agency to maintain a six-day delivery schedule. Former
President Barack Obama also included the stipulation to keep the
current delivery schedule intact in his budget proposals.
"There is no congressional consensus around moving to five day
delivery, " Postmaster General Megan Brennan said during a February
hearing on the postal overhaul legislation.
In fact, the USPS is thinking about the issue differently. As
first-class mail remains in a secular decline owing to electronic
communication, e-commerce deliveries have surged. Packages now make
up about 28% of overall revenue, up from nearly 20% in fiscal
2014.
With that added volume, the USPS is delivering more days to
accommodate the extra packages. Four years ago, the USPS started
delivering packages for Amazon.com on Sundays. Ms. Brennan has said
in the past that the USPS "is looking at how do we leverage our
infrastructure, which is an asset."
The National Association of Letter Carriers, the largest postal
union, said this week it would oppose any budget plan that reduces
delivery.
"Thanks to the e-commerce boom, the Postal Service is now
delivering seven days a week -- now is not the time to curtail
delivery days or reduce door delivery," said Fredric Rolando, the
union's president.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
May 26, 2017 13:01 ET (17:01 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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