USPS Realignment Saving Millions

The ongoing realignment of postal facilities to better fit the changing needs of customers is saving the Postal Service millions of dollars - but it and other cost-cutting measures are not enough to stave off a fast-approaching liquidity crisis, a House subcommittee was told last week.

"The Postal Service knows how to cut costs, streamline our excess processing network and make the necessary changes to bring our organization further into the 21st century," David Williams, vice president of Network Operations, told a subcommittee of the House Committee on Oversight and Government Reform. "Rightsizing our network is only one of many strategies the Postal Service has employed in our efforts to cut costs and improve efficiency."

Over the last four fiscal years, the Postal Service has reduced its size by 110,000 career positions and saved $12 billion in costs. "Our achievements notwithstanding, issues that fall outside our control continue to prevent us from being able to close the gap between revenue and costs," Williams testified. Absent Congressional action this year, the Postal Service will experience a cash shortfall and default on legislatively mandated payments to the Federal government.

The Postal Service is seeking passage of legislation that would address the statutory schedule for prefunding of retiree health benefits, address the overfunding of pension benefits and provide authority to adjust delivery frequency. Lack of action would result in consequences stretching into fiscal year 2012 and threaten a mailing industry that pumps more than $1 trillion into the nation's economy each year and employs more than 7 million Americans.

"More than 90 percent of mail-related jobs are in private companies of all sizes. The success of these firms and their millions of employees depend on a healthy and thriving Postal Service," Williams said.

Williams said legislative action must occur in concert with the continued efforts of the Postal Service to reduce costs by trimming its network footprint. Area Mail Processing (AMP) studies have been used since the 1970s to reduce a sprawling mail processing network that consisted of more than 2,000 facilities. Today, the Postal Service has reduced outgoing mail processing facilities to fewer than 300. The Office of Inspector General has conducted 35 audits related to AMP studies and consolidations since 2005 and in each case found that a valid business case existed to support the Postal Service's consolidation action.

The Postal Service is taking a similar business case approach to streamline the number of postal-operated retail locations, which totals approximately 32,000. With nearly 100,000 places to buy stamps and ship packages - including grocery stores, drug stores, office supply stores and other retail locations - customers have more than double the number of retail outlets for postal products and services as the number of brick-and-mortar Post Offices. With usps.com, customers can request free Priority Mail Flat Rate packaging, print a label, pay for postage with Click-N-Ship and request free Carrier Pickup for packages.

The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.