Mail volume down in slow economy

[September 25, 2008]  WASHINGTON (AP) -- The economic slowdown means business is off sharply for the post office, Postmaster General John E. Potter said Wednesday.

Potter said mail volume could decline by as much as nine billion items in the current fiscal year. Total mail volume last year was over 212 billion pieces.

While financial details for the year won't be available until November, Potter has said that the agency could face a loss of more than $2 billion.

The size of that potential loss requires steps now, including reducing work hours, Potter told the monthly meeting of the agency's governing board.

In addition the agency is offering early retirement -- without incentives or bonuses -- to thousands of clerks, mail handlers and supervisors.

The push to cut costs involves retirement offers to workers 50 and older who have 20 years of service and employees of any age who have 25 years of service. The agency began the fiscal year last Oct. 1 with 684,762 career employees, down from 696,138 a year earlier.

Postage rates rose a penny in May to the current 42-cent price. Another increase is expected next May, with the amount to be announced in February. Any increase is limited to the rate of inflation.

Last year the post office ended the year $5.1 billion in the red, that was about $300 million less than projected. The loss was a result of a required contribution to set up an employee retirement health benefits fund. Without that requirement the agency would have ended the year with a surplus.

While stressing the threat of losses, Potter told the board that "while we deal with the economic challenges, customers and service to our customers will always be number one on our agenda, it is why we exist, it is our franchise," said Potter.

A share of the expected loss this year stems from the popular forever stamps that remain valid for first-class postage regardless of price increases. The stamps were introduced at 41 cents and sold well before last spring's rate increase. They now sell for 42 cents.

The forever stamp forced the agency to change how it accounts for stamps that are purchased but not used. Formerly that was a category dominated by collectors who save the stamps, but people buying the forever stamp tend to save it until the price goes up and then use it. Early figures indicate that the stamp may be responsible for as much as $230 million in revenue loss.

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On the Net:

U.S. Postal Service: http://www.usps.com/

[Associated Press; By RANDOLPH E. SCHMID]

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