USPS takes new approach to smallest Post Offices

The USPS today released a new strategy, which it said could keep the smallest U.S. post offices open for business “while providing a framework to achieve significant cost savings” in an effort to regain financial solvency.

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The financial predicament the United States Postal Service is in is well-known and well-documented, especially in the pages of LM and on this Web site.

In February, the USPS said it projected its net losses would hit $21 billion by 2016. On several occasions in the 14 months the USPS has repeatedly that it wants to reduce annual costs by at least $20 billion by 2015.

Due to what has truly become a dire situation, the USPS has unveiled various plans in recent years to stop the bleeding. And today it released a new strategy, which it said could keep the smallest U.S. post offices open for business “while providing a framework to achieve significant cost savings” in an effort to regain financial solvency.

According to a USPS statement, this plan would keep existing Post Offices in place but with modified retail window hours to match customer use. And it said that access to retail lobby and PO boxes would remain unchanged and the town’s ZIP Code and community identity would be retained.

The USPS said that this strategy would be implemented over a two-year, multi-phased approach and would not be completed until September 2014, adding that when the implementation is done the USPS said it estimates it will save half a billion dollars on an annual basis.

Late last month, the U.S. Senate laid out a plan, entitled The 21st Century Postal Service Act (S. 1789), which passed by a 62-37 margin and aims to help the USPS regain its financial footing.

The main objectives of the bipartisan bill, which was sponsored by Sen. Joe Lieberman (I-Conn.), chairman of the Homeland Security and Governmental Affairs Committee, and Senator Susan Collins (R-Maine), Senator Tom Carper (D-Del.) and Senator Scott Brown (R-Mass.), in order to help the USPS become financially solvent include:
-giving the Postmaster General access to money USPS has overpaid into one of its retirement funds to provide incentives to encourage 100,000 eligible employees to retire.  This would help voluntarily “right-size” the workforce to take into account the steep decline in first class mail volume in recent years;
-reducing the amount of money that USPS has to prefund for retiree health benefits by amortizing the costs over 40 years and calculating those costs more appropriately;
-retaining overnight delivery of first class mail, but limit it in some cases to shorter geographic distances;
-preventing the Postal Service from going to five-day delivery for the next two years and require it to exhaust all other cost-saving measures first; 
-requiring USPS to set standards for retail service across the country, consider several alternative options before closing post offices, and provide for increased opportunity for public input;
-allowing USPS to sell non-postal products and services in appropriate cases;
-allowing USPS to ship beer, wine, and distilled spirits. 
-creating a Chief Innovation Officer to foster innovation at USPS
-reforming the Federal Employees Compensation Act, the federal workers’ compensation program; and
-the bill expands the alternatives USPS must consider before closing a post office and it establishes a Strategic Advisory Commission, to be composed of prominent citizens and charged with developing a new strategic blueprint for the Postal Service.

As LM has reported, one of the primary drivers for the USPS’s fiscal issues is the ongoing diversion of mail from paper to electronic communications and its Congressionally-mandated 10-year payment schedule at an average of about $5.5 billion per year to create a fund to pay future retiree health benefit premium, among others.

About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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