Going Postal
The fate of the U.S. Postal Service looks grimmer and grimmer with each passing day, adding to marketers’ uncertainties about using the mails as a way back to profits.
In August, the USPS reported a net loss of $2.4 billion for the quarter ended June 30, compared to a net loss of $1.1 billion last year. Postmaster General Jack Potter predicted the USPS could lose as much as $7 billion this year.
The USPS desperately wants to cut costs by taking steps like shuttering individual post offices and offering some employees early retirement packages.
Most of all, the USPS is trying to build momentum to get approval to cut mail delivery down to five days from the current six. Potter says this cutback will eventually happen, but many in the mailing industry think the move is shortsighted at best.
“There ain’t no way in hell [Potter’s] going to get five-day delivery,” said Gene Del Polito, president of the Association for Postal Commerce. “I think the best he’s going to get is two-year relief on the health benefit payments.”
Of course, cutting a delivery day would require Congressional approval. Congress has held hearings on this subject and has requested supporting data on the cost savings that five-day delivery would provide. Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, predicts there will likely be action in Congress on this matter in 2010, but not 2009.
The USPS is legally obligated to make a $5.4 billion payment to the U.S. Treasury on Sept. 30 to cover retiree health benefits, something Cerasale predicted they’d likely fail to do.
Action on two Congressional bills on the question was expected before the end of September. H.R. 22 and S. 1507, intended to provide the USPS temporary relief from this obligation for the next three to five years, have passed committees and at press time were awaiting a vote by the House and Senate.
