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Postal Service facing tough economic reality

December 13, 2011
Gary Andersen, Lee Smith

"We have a business model that is failing," Postmaster General Patrick Donahoe admitted a few days ago. But the question now is whether the Postal Service's new plan - charging customers more for less service - will work.

When the agency began closing post offices and downsizing processing centers, there were warnings it would result in delays in mail delivery. Nonsense, Postal Service officials insisted. Consolidating mail processing would be more efficient, they added. But this week they admitted there will be delays as a result of consolidations. First-class mail formerly delivered the day after it was sent will take two, perhaps three days to reach its destination.

And, on Jan. 22, the price of first-class stamps will increase by a penny, to 45 cents.

And the Postal Service still is considering a proposal to discontinue mail delivery on Saturdays.

About 5,700 post offices, including ones in Alpha and Granada, have been or are to be closed. About half the nearly 500 mail processing centers in the country are to be closed. About 100,000 Postal Service jobs are being eliminated.

Yet the agency, which does not receive taxpayer subsidies, remains billions of dollars a year short of covering expenses.

The Postal Service, with a budget of about $75 billion a year, is about $9.2 billion short of covering expenses. Members of Congress are among those demanding the agency get its house in order.

The Postal Service clearly needs to find a better business model. Charging higher prices for less service will not be sustainable in the long run.



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