The U.S. Postal Service is rumored to cut its spending by $3 billion in 2012. What does that mean? Well, a few things. None of which are good. Starting with the worst news, aka the K.O. punch of this story, 3,700 local post offices are scheduled to be closed this year and 250 of 500 mail-processing centers as early as March. That means roughly 100,000 workers will be out of a job. This cutback was inevitable given the lack of help from Congress.
Currently, if you opt for first-class priority on your postage, you can expect the mail to be delivered between 1-3 business days and usually the next day if it’s within the continental U.S. The cutbacks are going to push that ETA to 2-3 business days, meaning no more next-day deliveries in your own neighborhood. Say goodbye to Netflix DVD’s next-day. Phone your doctor to set up a new arrangement for your mail-order drug prescriptions. This also means no more favorite newspapers or magazines with breakfast, seeing as their delivery period would now be between 2-9 business days.
Jim Corridore, analyst for S&P Capital IQ, predicts, “It’s a potentially major change, but I don’t think consumers are focused on it, and it won’t register until the service goes away. Over time, to the extent the customer-service experience gets worse, it will only increase the shift away from mail to alternatives. There’s almost nothing you can’t do online that you can do by mail.”
This hard truth is the type of reality facing Postmaster General Patrick Donahoe, who waits for Congress to permit his workers to cut their duties to 5 days a week, raise stamp prices and reduce health care and other labor costs. If these requests aren’t answered, harsh actions will be taken in order to eliminate more red ink. With an expected $14.1 billion in losses coming this year, the U.S. Postal Service must makes cuts to the upwards of $20 billion by 2015, in order to turn a profit.
“We have a business model that is failing,” said Donahoe. One of the oldest and most trusted independent government agencies is beginning the downward spiral towards bankruptcy. With the continued progression of online communication, there is increasingly less doubt that within our lifetime, we will see the fall of the United States Postal Service.
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