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The Postal Service's grim route forward

By Ed O'Keefe

Updated 12:05 p.m. ET
The U.S. Postal Service issued a worst-case scenario cry for help on Tuesday, anticipating $238 billion in losses in the next 10 years if lawmakers, postal regulators and unions don't give the mail agency more flexibility in setting delivery schedules, price increases and labor costs.

The estimates released Tuesday also predict that letter carriers will deliver just 150 billion pieces of mail in 2020 -- a 26 billion-piece drop from last year as Americans shift more of their correspondence and transactions to the Internet and as marketers shift from first-class mail to the cheaper standard-mail option.

"What we wanted to do in the Postal Service is be realistic that this is occurring," Postmaster General John E. Potter said at a briefing for a small group of reporters Monday. "We wanted to look ahead to determine what the magnitude of those changes were, and we wanted to build a plan to react to those changes and continue to provide universal service to the American public."

The Postal Service paid $4.8 million for four months of research conducted by Accenture, the Boston Consulting Group and McKinsey and Co to gin up 50 potential options for future growth and cuts.

The agency narrowed that list down to five key areas. Read through them, vote for your favorite and then leave your thoughts in the comments section below:

(1) Products and services: Officials plan to create new products, services and modes of delivery, including "hybrid mail products" that allow some deliveries via e-mail. "That option is a double-edged sword, because while you can capture some of the revenue, it also could accelerate volume declines," Potter said. Finally, the mail agency wants to develop new options for advertisers that previously used newspapers to reach customers.

(2) Pricing: The Postal Service wants the Postal Regulatory Commission to give it more pricing flexibility and may use some exigent price increases -- or price jumps that can occur on a temporary basis to raise emergency funds. The agency will also consider raising rates on periodicals, nonprofit mail and media and library mail -- deliveries that create a $1 billion shortfall the agency currently subsidizes.

(3) Service levels: Three things to consider here: delivery time, delivery frequency and delivery locations.

The first part would increase the amount of time it takes for a letter to get from you to the intended recipient, meaning a mailing that used to take two days to arrive might instead take three to five. But there's an important problem: Delivery delays could severely impact financial institutions and customers who rely on quick turnarounds. Those who get medications through the mail might also suffer.

The Postal Service is also convinced that this is the year lawmakers will cut Saturday mail deliveries. Depending on which poll you read, anywhere from 50 to 70 percent of customers support the cut. But post offices and post office boxes would still be open and accessible on Saturday.

Finally, the Postal Service wants to close thousands of post offices in the coming years and then move some postal products and services to nearby supermarkets, pharmacies or coffee shops.

(4) The workforce: More than 300,000 postal workers will either retire or voluntarily depart in the next decade, Potter said. The agency plans to take advantage of that trend by increasing its use of part-time or flex workers. Expect flexibility and health and benefit costs to dominate forthcoming labor negotiations.

(5) Government support: Potter wants to convince lawmakers that it's time to do away with pre-paying its retiree benefits -- a $5 billion annual charge that no other major corporation or federal agency has to pay. The agency will not seek subsidies for its universal service -- even though it can. The agency will not seek taxpayer support due to the ongoing downturn, Potter said.

Leave your thoughts in the comments section below

By Ed O'Keefe  | March 2, 2010; 9:00 AM ET
Categories:  Agencies and Departments, Congress  
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PMG Potter continues to ignore the Postal OIG audit showing that we overpaid into the retiree health benefit fund by over $75 billiion -- money which should be refunded to postal operations -- but perhaps wiith an independent oversight panel that would prevent present management from continuing to build its frivolous, redundant empire at the expense of union workers and the American publlic.

Meanwhile, Potter likes to cite the result of $4 million worth of commissioned surveys that were tailored to his preferred conclusions -- that USPS is broke and going to be more broke.

Alternative biz practices are laughable, as USPS is run by cronies with GED certificates, petty bureaucrats with no inkling of competitive business strategies, bent on self-preservation at any cost. USPS needs to shed its many heavy layers of management -- incompetents who do not touch the mail; perform no constructive tasks, undermine morale, and live only to please higher-ups who will care for them.

The postal unions should all seriously consider staging another wildcat strike (a'la 1970) -- and their no-strike clause be damned, as postal management has stepped over the boundaries of rational discourse. There is no Nixon in the White House this time to call out the troops to deliver the mail! Only a strike would help reveal just how vital postal service is to this country, and how vital the hands-on workers are to this service.

Posted by: patdawson | March 2, 2010 12:52 PM | Report abuse

Time and technology have completely passed by the obsolescent USPS. If all post offices closed their doors today in six months we'd all wonder why we ever thought we still needed it.

Posted by: hit4cycle | March 2, 2010 1:13 PM | Report abuse

First is service: Close post offices on Monday, no mail service Monday. Stay open on Saturday 9-12 and mail service. Tues-Thurs open 9-5:30 so those of who must work and commute can get to the post office after our work hours for packages.
It gives better service. I agree as the next generation continues with online banking and paying bills via direct billing the P.O. will be gone. Yet there are still some old people doing it the old fashion way so as of now figure to give better service. limited hrs but shifting them. Otherwise you will continue on your slow demise.

Posted by: bncfirme | March 2, 2010 4:15 PM | Report abuse

Why is there no mention of cutting costs like the multi-million dollar studies,or buying postal executives homes when they relocate. There is no mention of postal executive yearly bonuses, yet the postnmaster general earns more then the president

Billions are being spent yearly to build new facilities, and purchase new mail processing equipment. If there is less mail every year, why is this new equipment necessary?

The USPS policy seems to be spend, spend, spend, and when you run short of money cut citizen services so they can start spending again.

The studies did point out the corrupt postal culture, I guess that they had a point there !

Posted by: reader58 | March 2, 2010 5:50 PM | Report abuse

Wait a minute... They paid 4.8 mil for 4 months of research? Where did that money come from? Too many high paid "management" is part of the reason we are in the mess we are in. Get rid of 'em!!!!!! They don't do anything but sit on their butts and tell us how to do our jobs when probably none of them have ever moved a single piece of mail.

Posted by: cdsmith331 | March 2, 2010 9:26 PM | Report abuse

"The postal service has about 300,000 employees". On holiday Mondays these employees get the day off and get paid. Gee, no wonder USPS is in the red!! Multiply days of no work, regular pay by the number of holidays the USPS gives to their employeees and you see what we mean. I have no sympathy for them what-so-ever!

Posted by: LeeInOceanside | March 5, 2010 11:10 AM | Report abuse

What exactly is a "hybrid mail product" and why would anyone pay USPS to send anything via email when we can send email ourselves for free?

Posted by: marnie2 | March 5, 2010 9:10 PM | Report abuse

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