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U.S. Post Office Ends Saturday Delivery to Save Itself

Daily Ticker

U.S. Postmaster General Patrick Donahoe announced Wednesday morning that mail delivery on Saturdays will be halted beginning in August.

"The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America's changing mailing habits," Donahoe said in a statement. "We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings."

The struggling U.S. agency loses $25 million a day, according to Donahoe. Last November the agency reported it lost $15.9 billion for the fiscal year that ended Sept. 20, more than triple its loss from the previous year. The U.S. Post Office has also reached its $15 billion borrowing limit with the Treasury.

The proliferation of online banking and email has made the U.S. Post Office less relevant in today's digital age. U.S. mail volume totaled 159.9 million pieces last year, a 5% decline from 2011.

Related: TIME'S UP: The U.S. Postal Service Has Finally Run Out of Money

The AP reports that ending Saturday delivery will save USPS $2 billion annually. The 237-year-old agency will continue to deliver packages six days a week and post offices would remain open on Saturday.

Contributions to the employee pension fund and future retiree health benefits have also contributed to the agency's financial problems. The agency has taken various measures over the last two years to reduce its financial hardship: consolidating 70 of its mail processing facilities; reducing hours at many Post Office retail locations; merging plant facilities, and laying off nearly 60,000 career employees.

Related: USPS to Cut Another 35,000 Jobs: Can the Post Office Be Saved? Should It Be?

Last April the Senate approved a bill that would allow the U.S. Postal Service to offer early retirement to 100,000 postal workers, about 18% of the agency's workforce. This would have allowed the agency to recoup more than $11 billion it had previously paid to an employee pension program, according to The New York Times. The Senate refused to cut Saturday delivery as a means to trim expenses. The House did not act on the Senate bill.

The Daily Ticker's Henry Blodget and Aaron Task offer different perspectives on the USPS news. Henry says "it's about time" the U.S. Post Office cut Saturday service, noting that if the agency was a corporation, this move would have been made years ago. He expects an outcry from Congress and the public about the Saturday delivery announcement, but doubts few Americans would pay more in taxes so they can read their freshly-delivered magazines and shopping catalogues over the weekend (for the record, this blogger would).

Related: FedEx Preps For Its Busiest Shipping Day Ever

Aaron says he would support an increase in the price of stamps to keep Saturday delivery functioning. The agency increased the price of a first-class stamp to $0.46 in January.

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