* Files to end next-day mail, close processing facilities
* Could be headache for newspaper, magazine publishers
* Plans to shrink network would save $3 billion
* Seeking congressional overhaul of its operations
By Emily Stephenson
WASHINGTON, Dec 5 The cash-strapped U.S. Postal
Service on Monday moved forward with plans to end next-day
delivery of letters, postcards and other First Class mail.
In a notice filed with its regulator, it also sought
approval to close more than half of its 461 processing
facilities that have been critical for next-day delivery.
The Postal Regulatory Commission will study the proposed
changes and issue a nonbinding advisory opinion.
The move could create some headaches for mailers,
particularly publishers of newspapers and magazines, industry
observers said. But they said the extent of the hassles depend
on the way the Postal Service changes are implemented.
The Postal Service, which has been struggling to offset
tumbling mail volumes and billion-dollar annual losses, first
announced in September it would study 252 processing sites for
possible closure in 2012.
The agency is looking to find $20 billion in annual savings
by 2015, about $3 billion of which could come from various
plans to shrink the network.
U.S. Postal Service (USPS), which does not receive any tax
payer money and relies solely on the sale of postage and other
products to fund its operations, sees reducing its network of
post offices and processing plants as crucial as consumers
increasingly pay bills online and correspond by email.
"The fact of the matter is our network is too big. We've
got more capacity in our network than we can afford," David
Williams, USPS vice president for network operations, told
reporters on Monday.
"More importantly, we've got to set our network up so that
when volume continues to drop, our network is nimble and
flexible enough to respond to those volume losses."
The closures would require the Postal Service to adjust its
current delivery standards. First Class mail would be delivered
in two or three days instead of one to three.
Delivery times for most other more expensive classes of
mail, such as Priority Mail and Express Mail, would not change,
Williams said. A First Class letter now costs 44 cents.
Williams said the service standards would not change before
The proposal makes some exceptions for periodicals,
offering overnight delivery for certain pre-sorted items if
they are delivered to the plant early enough.
Joyce McGarvy, vice president for distribution at Crain
Communications, said the proposal would mean Crain's business
and trade publications would have to be turned in several hours
earlier. That could mean the publisher prints its papers a day
early or that the publications reach readers a day late.
And once USPS closes facilities, mailers may have to travel
farther to drop off mail, which would increase costs.
"We're dropping in lots of places right now, and some of
those places may not exist," McGarvy said.
Paul Boyle of the Newspaper Association of America said
earlier deadlines could cause some papers to lose last-minute
advertising but that it's too early to determine how the
changes will be implemented.
Williams said the Postal Service's market research found
that many customers do not expect overnight delivery of letters
sent outside their towns or zip codes.
"They're already choosing speed. They're choosing
electronic bill payment, they're choosing electronic
communication via the Internet and email," he said.
"Our network is simply too big to handle the revenues that
are coming in today but, more importantly, way too big for what
we're projecting in the future."
The agency lost $5.1 billion in fiscal year 2011 and is
projecting a $14 billion loss this year. The U.S. Congress has
twice moved the due date for a $5.5 billion payment to pre-fund
retiree health benefits which USPS says it cannot afford.
USPS has said it will run out of money by September of next
year without a congressional overhaul of its operations.
The Postal Service has announced a host of other
cost-saving ideas, including studying thousands of post offices
for possible closure. The agency has asked for permission to
end Saturday mail delivery, pull out of federal health and
retirement programs, and other new powers.
Committees in both houses of Congress have approved postal
bills, but neither full chamber is expected to vote on the
issue this year. Postal officials have said current bills do
not go far enough to fix the agency's problems.