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  • Sending a Message: USPS Sinks Saturday Service

    Photo credit: Newscom

    The U.S. Postal Service (USPS) caused an uproar yesterday when it announced that it would be ending Saturday delivery of letter mail this August, saving an estimated $2 billion per year.

    Opponents—including many Members of Congress—expressed outrage at the move, arguing that it would cause hardships for postal customers and questioning USPS’s legal authority to make the change.

    Despite all the hand-wringing, however, this was a common-sense step by postal managers, who are faced with a flood of red ink that reached $16 billion last year. And given the relentless march of digital technology, more changes will be necessary if USPS is to survive. The question now is whether Congress will let those necessary changes take place or block them, dooming the enterprise and putting American taxpayers at risk.

    Under USPS’s plan, letter mail would be delivered only on weekdays, instead of Monday through Saturday as is current practice. Package delivery would continue on a six-day-per-week basis, with post offices remaining open on Saturdays as well.

    The $2 billion saved is only a down payment on the estimated $20 billion needed for USPS to break even. Nevertheless, USPS’s determination to move forward with the change is significant. Prior efforts by USPS to end Saturday delivery hit a brick wall on Capitol Hill—as have other reforms. Legislators even inserted a ban on dropping Saturday service into the appropriations bill for USPS. Yesterday’s announcement was a metaphorical finger in the eye of its congressional critics, a statement that USPS will be moving forward with necessary changes even in the face of congressional opposition.

    USPS has not yet explained what it will do if Congress renews the current ban on service changes. One possibility is that USPS will simply decline federal funding, which totals less than $100 million, one-twentieth of the estimated savings.

    The outcome of USPS’s battle to survive is far from clear. Competitive pressure from the Internet continues to erode postal revenues at an alarming rate. The good news is that USPS—long a metaphor for inefficiency and mismanagement—seems willing to make the unpopular decisions necessary to deal with the new environment. Sadly, the same cannot be said of Congress.

    Posted in Economics [slideshow_deploy]

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