USPS Looks for Long-Term Viability

WASHINGTON, DC—Facing unprecedented volume declines and a projected, cumulative $238 billion shortfall during the next decade, Postmaster General John Potter outlined an aggressive plan of cost cutting, increased productivity and an array of legislative and regulatory changes necessary to maintain a viable United States Postal Service.

"The crisis we're facing gives us an historic opportunity to make changes that will lay the foundation for a leaner, more market responsive Postal Service that can thrive far into the future," Potter said.

Mail volume is projected to fall from 177 billion in 2009 to 150 billion in 2020. That represents a 37 percent decline in First-Class Mail alone. Revenue contributed by First-Class Mail will plummet from 51 percent today to about 35 percent in 2020.

"Ensuring A Viable Postal Service for America," the USPS business plan, addresses these challenges, and describes an agile Postal Service that can adapt to America's changing mailing habits and preferences.

If the Postal Service takes no action, it will face a cumulative shortfall of $238 billion by 2020. But Potter outlined a number of actions that could amount to as much as $123 billion in savings during that same time period.

Despite these efforts, an estimated $115 billion shortfall will remain. The business plan identifies actions to close that gap:

• Restructure retiree health benefits payments to be consistent with what is used by the rest of the federal government and the majority of the private sector, and address overpayments to the Postal Service Civil Service Retirement System pension fund.

• Adjust delivery days to better reflect current mail volumes and customer habits.

• Continue to modernize customer access by providing services at locations that are more convenient, such as grocery stores, pharmacies, retail centers and office supply stores. Increase and enhance customer access through partnerships, self-service kiosks and a world-class Website.

• Establish a more flexible workforce that is better positioned to respond to changing demand patterns, as more than 300,000 employees become eligible to retire in the coming decade.

• Ensure that prices of market dominant mailing products are based on demand for each individual product and its costs, rather than capping prices for every class at the rate of inflation.

• A modest exigent price increase will be proposed, effective in 2011.

• Permit the Postal Service to evaluate and introduce more new products consistent with its mission.

"Lifestyles and ways of doing business have changed dramatically in the last 40 years, but some of the laws that govern the Postal Service have not," Potter added. "These laws need to be modernized to reflect today's economic and business challenges, and the dramatic impact the Internet has had on American life."