Embattled Postal Service looks to cost savings

No Saturday service would end 150 years of tradition

Butch Smith sorts mail Friday morning at the Cortez Post Office. The U.S. Postal Service announced last week it will end Saturday delivery of flat items - letters, bills, magazines - the week of Aug. 5. Enlargephoto

Sam Green/Cortez Journal

Butch Smith sorts mail Friday morning at the Cortez Post Office. The U.S. Postal Service announced last week it will end Saturday delivery of flat items - letters, bills, magazines - the week of Aug. 5.

Postmaster General Patrick R. Donahoe caused a stir last Wednesday when he announced, at a press conference, that the U.S. Postal Service would stop Saturday delivery of letters, bills and magazines starting in August.

The move prompted criticism from the letter carrier's union and confusion in Washington, D.C. as to whether Donahoe had the authority to make the change on his own. The USPS operates in a jurisdictional gray area, receiving no tax money but subject to Congressional oversight. It is mandated by Congress to serve every house in the country - no matter how remote - to deliver six days a week.

Donahoe argued that public opinion was on his side - 70 percent of Americans supported dropping Saturday delivery in a July 2012 New York Times/CBS News poll - and that he had no other choice given unyielding financial woes. Although it turned a profit as recently as 2006, the Postal Service has been hemorrhaging money ever since. It recorded a loss of nearly $16 billion last year alone (or $36 million a day). The move to a five-day week is expected to save the agency an annual $2 billion.

Shelley Rullestad, postmaster at the Cortez Post Office, said he thought Donohoe's announcement was meant to be a catalyst for Congress to act. A reform bill passed the U.S. Senate last April but stalled in the House of Representatives. Congress adjourned just after the new year, leaving the problem unsolved.

"We're required by law to do things in this day and age that don't make good business sense," Rullestad said, referring to the $5.5 billion the USPS is obligated to pay into a fund each year since 2006 for future retiree health benefits. "No other agency, private or government, is required to do that."

The benefits have grown so burdensome that the Postal Service missed and defaulted on its payments twice in 2012.

Rullestad said dropping Saturday delivery is a sensible move given the decline in mail volume. As email replaces handwritten letters, magazine subscriptions go electronic, and online bill pay and banking gain in popularity, yearly circulation continues to drop. From a peak of 213 billion items in 2006, the USPS processed 160 billion last year.

Package delivery, however, is on the rise, driven by e-commerce retailers like Amazon and eBay.

"A large and growing part of our business is packages. We will continue to deliver those (on Saturdays)," Rullestad said.

Prescription drugs will still be delivered on Saturdays too, as will letters sent via Priority Mail or Express Mail.

If Congress does not intervene to stop Donahoe's gambit, one local issue to be ironed out is circulation of the Cortez Journal. Currently, subscribers outside the Cortez city limits have their newspaper dropped off by the Postal Service along with other mail. An end to Saturday service would mean not receiving the paper until Monday.

The Journal is studying several options for distributing the Saturday edition in a timely manner.

"We've known Saturday mail delivery eventually would be discontinued," said publisher Suzy Meyer. "Now we know when, if Congress lets this plan go forward. We have time to implement a strategy that will serve our readers and advertisers."

Rullestad agreed, saying the five-month window will allow companies that currently rely on Saturday delivery to "develop contingency plans."

Rullestad didn't believe any local layoffs of career carriers were imminent because of the five-day change, but said the need for "rotating carriers," also called T-6 carriers, would be diminished. Currently, rotating carriers fill gaps on days the full-time carriers are off.

In recent years the Postal Service has tried to trim costs by limiting hours of operation and streamlining its workforce. Under political pressure, Donahoe last May backed off a proposed plan to shutter and consolidate 3,700 smaller locations, instead opting to reduce hours. Offices in Rico, Lewis, Yellow Jacket and Pleasant View were among those to survive calls for closure.

More than 280,000 USPS positions have been eliminated since 2000 via layoffs, retirement incentives and attrition.

lukeg@cortezjournal.com