US Postal Service ends LTL trial as it seeks approval for cost-cutting measures

The US Postal Service (USPS) is on track for another year of financial losses. For fiscal year 2010, the Post Office recorded losses in excess of $8bn and so far this year, it has reported almost $6bn in losses. The postal service, which receives no taxpayer funds to pay for operating costs and relies on sales of postage and other products, has struggled with a steep decline in mail volumes as consumers increasingly use email and pay bills online. The drop-off was also exacerbated by the economic recession.

The mail carrier has submitted cost-cutting proposals to Congress, but it appears Congress will not be taking up the issue anytime soon especially after dealing with the politically-charged debt-ceiling issue earlier this month. The agency is seeking legislation action that would allow it to establish its own health benefits programme and administer its own retirement system. Also, it needs the ability to adjust the size of its workforce to match operational needs and a changing marketplace.

A 2006 law requires the USPS to pre-fund its retiree health benefits with contributions totalling $59bn in ten years. A $5.5bn payment is due in September, but it has warned it will probably default on the payment after it reaches its $15bn borrowing limit.

The USPS is also proposing to cut 220,000 jobs, more than a third of its full-time staff by 2015. However, in order to initiate layoffs, the agency must seek changes in its collective bargaining agreements with its two postal unions, an issue the unions vigorously oppose.

Other proposals the mail carrier is asking Congress to approve includes eliminating Saturday delivery, closing up to 300 processing centres and 3,700 post offices over the next five years.

The US Post Office is also cutting back on potential services it was testing. For example, the carrier recently announced it is ending its LTL hauling service on September 19. The "Collaborative Logistics" market test began in 2009 and under the programme, the USPS sought LTL freight to even out mail shipments between cities by filling out trailers. According to the postal service, "Collaborative Logistics" was a major success, saying it generated millions in revenue during its two year span testing period and promised continued growth. But USPS said it has since reevaluated its plans based on a planned reorganisation and poor financial condition.

Faster than expected sales declines could leave the US Post Office technically insolvent by the end of September and unable to pay its bills by mid-2012, unless Congress takes action and agrees to the agency’s proposals. Unfortunately any government agreement will not come soon enough for the Postal Service as it struggles to find other ways to cut costs.

Quelle: eyefortransport
Portal: www.logistik-express.com