The U.S. Postal Service has cut $8.3 billion in costs over the past three years, enabling it to hold current postage rates until 2006, Postmaster General Jack Potter said Tuesday.
“The Postal Service will continue to focus on the strategies identified in our Transformation Plan, and we will continue to deliver the plan’s commitments ahead of schedule,” said Potter, at the monthly USPS Board of Governors meeting in Boston.
Three years ago the Postal Service committed to take $5 billion in savings and cost avoidances out of the annual spending by 2006. In the first three years, Potter said $4 billion has been saved. He added he expects to save more than $1 billion in 2005.
Separately, USPS CFO Richard Strasser projected that, “For the first time in history, Standard Mail volumes will exceed First-Class Mail volumes. Total mail volume should grow by 1.4 billion pieces, a 0.7% growth rate.”
He noted that forecasts point to a 2.1 billion-piece decline in first class mail volume in the coming fiscal year, which starts Oct. 1, while standard mail is expected to grow by nearly 3.8 billion pieces.
Strasser said next year’s financial plan requires continuing cost reductions of $1.4 billion, which include a reduction of 23 million work hours, and a sixth straight year of increased productivity. “Since 1999, the Postal Service has reduced total work hours by a cumulative 728 million,” he said.
He added that the USPS would absorb higher fuels costs and offset inflation-driven health benefits cost increases through another year of cost reductions.
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