After more than two centuries, the US Postal Service, and its eagle logo, are as American as Coca-Cola and baseball.
Yet the venerable institution is under threat, as the onslaughts of internet commerce and mobile communications are forcing cuts to postal services and staff.
With first-class letters and postcards declining by 8 per cent a year, the Post Service losses are rising; and the state-owned company is fighting for survival. Radical measures are deemed necessary to avert bankruptcy.
The Postal Service was founded in 1775. Its first chief executive, the postmaster general, was Benjamin Franklin, one of the founding fathers of the United States—a publisher, inventor, diplomat and signatory to the Declaration of Independence.
In recent decades, the Postal Service was a major cycling sponsor. Lance Armstrong wore a Postal Service jersey for six of his seven Tour de France victories.
But social and technological changes are steadily whittling away at the lucrative first-class
mail, in which the Postal Service still holds a legal monopoly. Down 50 per cent in a decade, that category includes bill payments, which people increasingly make over the internet; and even post cards, which are disappearing as people send digital snapshots from their camera phones.
Meanwhile, the number of post offices and letter boxes has not been cut proportionately.
“The Postal Service is in a crisis,” says Patrick Donahoe, the 73rd postmaster general. “We are forced to face a new reality.”
From October to June, the Postal Service had losses amounting to 5.7 billion dollars, and is facing a potential 10-billion dollar shortfall by the end of its budgeting year. President Barack Obama had to defer a payment of 5.5 billion dollars, due to a health fund, for postal workers.
After one year in office, Donahoe is drawing up a massive savings programme. More than 250 sorting centres, and up to 3,600 post offices could be closed down; while 220,000 jobs are to be axed in the next several years.
The Postal Service currently has 650,000 employees, down 250,000 from a decade ago; but the US Postal Service is still one of the world’s biggest employers.
US postal workers get better pay, pensions and health benefits than their counterparts working for private package delivery companies. About 80 per cent of the Postal Service’s costs are accounted for by staff, compared with 50 per cent for UPS and FedEx. The Postal Service has already started hiring cheaper, untrained support staff to save money.
“We need to lower our annual costs by 20 billion dollars by 2015, in order to become profitable again,” Donahoe says.
Delivering mail one day slower would save 1.5 billion dollars annually. Not delivering mail on Saturdays would save 3.1 billion dollars, he says. Yet to carry out such drastic measures at the fully state-owned company, Donahoe needs political support.
“We need to be able to act more like a private company,” he told a congressional committee.
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