USPS Begins Closures

The US Postal Service has started telling employees at more than 200 of its mail sorting offices across the USA that their facilities will shut down soon.

After a five month review of the USPS mail processing network, which currently consists of 461 Area Mail Processing plants, USPS said 223 are set to be merged with other plants.

As plants close, not all jobs will be lost, however 35,000 jobs will be cut from the current workforce, and these are in addition to the 34% reduction of its workforce since the year 2000.

USPS has the difficult task of trying to reduce its operating costs by $20bn a year in order to stay viable.

US Postmaster General Patrick Donahoe said “As we go forward with this change it is going to be difficult but we must do this in order to keep the Postal Service healthy financially going into the future.”

While USPS promised Congress a halt on mail plant closures until May 15th, in the hope of changes to legislation being passed, the halt on closures did not stop closure reviews from occurring.

It has however stated it still will not be closing sorting offices prior to May 15th.

It is also waiting on a regulatory review of changes to 1st Class Mail deliveries, as it wants to turn 1st Class Mail into a 2 to 3 day service, and to stop overnight deliveries for nearly all mail. While this will slow down parcel delivery fairly dramatically, it will reduce costs and that is clearly the main objective.

First Class Mail makes up just over 40% of total mail volumes, but actually contributes more than 60% of its overall revenues. Mail totals however, have shrunk by 25% since 2006 thanks to widespread use of e-mail.

The company is currently $13bn in debt with a legal borrowing limit of $15bn, but is forecast to make over $14bn in additional losses every year moving forwards unless dramatic changes are made.

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