The U.S. Postal Service wants to study roughly 1,000 post offices for possible closure – the latest cost-cutting step from an agency that is scrambling to deal with a projected $7 billion deficit this year and larger losses in 2010.
The agency started its review earlier this year with approximately 3,200 post offices, and decided about 1,000 of them are “candidates for further review.” Postal managers say they will consider several factors in deciding whether to close those facilities: mail volume, proximity to other post offices, and the potential savings in labor and utility costs.
Post offices only generate about 71 percent of the Postal Service’s revenues each year; the rest comes through alternative channels, particularly the Postal Service’s Web site.
“Each year more and more postal transactions are now accomplished online,” said Jordan Small, the Postal Service’s acting vice president for network operations. “We consider this a success… [but we need]to determine if there is, indeed, excess capacity in the network.”
The post office review is one recommendation from the Government Accountability Office, which added the Postal Service to its high-risk list last week. GAO analysts say they are deeply concerned about the agency’s finances. Postal officials say they will probably post another $7 billion deficit next year – even after slashing $8 billion in costs.
“The Postal Service urgently needs to restructure,” said Phillip Herr, the GAO’s director of physical infrastructure issues. “With regards to delivery operations, the Postal Service has more than 350,000 carriers, and delivery services represent the largest cost segment.”