Understanding Postal: Caught in the Postal Downstream

• In December 2011, the USPS delayed its planned closings of more than 200 mail processing centers until May 2012. This downsizing is one of a few cuts the USPS can make without the need for legislation. Nevertheless, Congress had a hand in delaying this measure, which will set this valuable cost-cutting action back at least three months.
• A key part of the USPS’s plan to return to solvency is to trim its workforce by as much as 225,000 from its current number of 550,000. It can induce about 100,000 losses through attrition over the next few years, but some are calling for the ability to lay off 125,000 additional workers. It’s unlikely Congress will give the USPS this authority.
• Each bill, as well as the plan put forth by the Obama administration, allows for some favorable changes to the USPS, but also denies some changes the USPS has been calling for. For instance, the elimination of Saturday mail delivery, which Postmaster General Pat Donahoe says can provide annual savings of $3.1 billion — although the Postal Regulatory Commission (PRC) calculates the savings as less — was denied in the marked-up Senate bill.

Weighing in on Mail Volume
The Postal Service needs scale to deliver to every address every day. At the center of the postal storm is the loss of volume and revenue in First Class mail, the USPS’s most profitable mail category. Having peaked at 98 billion in 2006, First Class volume has since dipped below 78 billion pieces per year and is projected to drop by half by 2020. This is largely due to a migration to online billing and bill payments and movement away from correspondence via letters and cards in favor of email, Facebook and Twitter.