The US Postal Service announced on Monday that it would close half of its 500 mail processing facilities around the country, slowing first-class mail delivery for the first time in decades while forcing many stamped letters to arrive in two days rather than one. Around 42% of first-class mail is currently delivered the next day.
The post office is estimated to lose $14.1 billion next year, largely because it has put off its congressionally mandated $5.5 billion pre-payment for retiree health benefits. The post office is scheduled to default on the latest payment. If Congress doesn’t step in, the USPS will owe $11.1 billion next year just for future retirees.
The cuts to first-class mail are largely a short-term financial plan that may hurt the postal service in the long run. For the last 40 years, the post office has pledged to customers that it could mail a stamped letter within the continental U.S. within one to three business days. But with a reduction in mail processing centers, the distance that letters will have to travel between a post office and a processing facility will significantly lengthen.
The closings could affect a variety of companies that rely on the USPS to ship their products to customers in a timely manner. Pharmacies use first-class mail to ship prescriptions, Netflix uses it to get DVDs to members and publishers rely on it to get newspapers and magazines to their readers.
The move will save the post office $3 billion, and Postmaster General Patrick Donahoe has said that he’s trying to push the postal service to operate much more efficiently in order to get it back onto a firmer financial footing.
“If we do nothing, we will have a death spiral,” Donahoe told the Associated Press. But the cuts could hasten that death spiral. As fewer Americans believe they can rely on the post office for prompt service, more are likely to seek out alternatives, whether that’s online or through private carriers like FedEx or UPS.
The cuts won’t be implemented until March, after the busy holiday season. But these are only the beginnings of what are likely to be much more fundamental shifts in the post office’s business model. Proposals to lay off tens of thousands, close thousands of post offices and possibly reduce mail delivery from six to five days a week are all being considered.