Amid speculation that the United States Postal Service might layoff significant portions of their workforce or downsize delivery service to only five days per week, the USPS reported a first quarter loss of $384 million this week.
Citing the economic recession as the main reason for a decrease in mail volume by 5.2 billion pieces during that time, compared to the year before. The 9.3 drop in volume was the eighth consecutive quarter that volume has declined. The Post Office is expecting that volume for the whole year will be down by approximately 12-15 billion pieces, as there is no end in sight to the current economic downturn.
These preliminary numbers indicate that First-Class Mail volume decreased by 1.8 billion pieces and Standard Mail volume was down by 3.0 billion pieces in the first quarter.
Retail sales, employment and investment spending are all major contributors and indicators of mail demand, and all three areas are suffering from the recession. Demand from these areas is expected to decrease further as 2009 progresses.
From the press release:
“We are taking bold steps to cut costs immediately. At the same time, we are examining, realigning and streamlining our business to address longer-term financial pressures while continuing to provide high levels of service to the America public,” Postmaster General John Potter told the Governors. These steps include:
- Eliminating $5.9 billion in costs through fiscal year 2010, including the reduction of 100 million workhours this year, doubling last year’s efforts. In quarter one, almost 27 million workhours were reduced compared to the same period last year. Other cost-containment efforts include freezing the salaries of all Postal Service officers and executives at 2008 pay levels, reducing travel budgets, and halting all construction of new postal facilities.
- Requesting Congress to provide legislative assistance by adjusting a portion of the payment requirements of more than $7 billion a year for retiree health benefits (no tax subsidy is requested) and by providing the Board with the authority to adjust the number of delivery days, if necessary, based on mail volume.
- Working with the National Association of Letter Carriers to implement a new process to evaluate and adjust delivery routes to help achieve workhour reduction targets.
- Maximizing operational efficiency by pursuing efforts to consolidate some excess capacity in mail processing and transportation networks while protecting service.
- Reducing employee complement through attrition and voluntary early retirement. The number of career employees at the end of the first quarter was down by 24,240 compared to the same time a year ago.
- Introducing new products and offering price and volume incentives to consumers and businesses. Last year’s creation of a new Mailing and Shipping Service division is also helping to bring new products to market more quickly and effectively.
“The Postal Service is an important public service and a vital economic engine. We are focused on identifying and implementing strategic solutions to ensure the Postal Service continues to deliver for Americans today and for future generations,” Potter assured the Board.