Trump's Fix for Post Office's Deep Losses: Cut Back Saturday Delivery

By Paul Ziobro Features Dow Jones Newswires

President Donald Trump's proposed budget would let the U.S. Postal Service cut back on delivery days, a move that helps the unprofitable agency save money while putting it at odds with longstanding congressional demands.

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The USPS currently delivers mail six days a week across the country, while also offering package delivery on Sunday for internet giant Amazon.com Inc. and others.

The White House budget released last week would let the quasigovernmental agency scale back delivery frequency "where there is a business case for doing so." It is one of several solutions proposed to address the financial struggles at the USPS.

The USPS has posted multibillion-dollar losses each year over the past decade, largely due to requirements to prefund retiree health benefits. The White House forecasts annual losses to continue at around $5 billion

The White House is also pushing for changes to how rates are set and for more efficient delivery options than going door to door, like dropping off letters at "cluster boxes" for residents of a neighborhood or property development.

It estimates the overhauls could improve the USPS's financial picture by $47 billion over the next decade.

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A USPS spokesman said the agency "appreciates that the president's proposed 2018 budget recognizes the need to enact postal legislative and regulatory reform. Both are essential to enabling the Postal Service to meet its obligations in a financially sustainable manner."

Most of the White House's changes in the budget document fit with congressional postal overhaul legislation that passed the House Oversight and Government Reform Committee with bipartisan support. The legislation also would change how the agency calculates pension costs and liabilities and would automatically enroll USPS retirees in Medicare programs.

A Senate postal overhaul bill has yet to be introduced.

But it is the option to reduce delivery days that could set up a showdown in Congress.

Congress has swatted away several attempts to curb six-day a week delivery. The USPS, in an attempt to save $2 billion annually, in 2013 tried to scale mail delivery back to five days a week while continuing to deliver packages on Saturdays. The proposal met stiff opposition from postal unions and congressional members and was dropped.

Annual federal appropriations bills that pay the USPS for free and reduced rate mailing have long contained language that requires the agency to maintain a six-day delivery schedule. Former President Barack Obama also included the stipulation to keep the current delivery schedule intact in his budget proposals.

"There is no congressional consensus around moving to five day delivery, " Postmaster General Megan Brennan said during a February hearing on the postal overhaul legislation.

In fact, the USPS is thinking about the issue differently. As first-class mail remains in a secular decline owing to electronic communication, e-commerce deliveries have surged. Packages now make up about 28% of overall revenue, up from nearly 20% in fiscal 2014.

With that added volume, the USPS is delivering more days to accommodate the extra packages. Four years ago, the USPS started delivering packages for Amazon.com on Sundays. Ms. Brennan has said in the past that the USPS "is looking at how do we leverage our infrastructure, which is an asset."

The National Association of Letter Carriers, the largest postal union, said this week it would oppose any budget plan that reduces delivery.

"Thanks to the e-commerce boom, the Postal Service is now delivering seven days a week -- now is not the time to curtail delivery days or reduce door delivery," said Fredric Rolando, the union's president.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

May 26, 2017 13:01 ET (17:01 GMT)