US Postal Service To Enter New Lines Of Business

US Postal Service To Enter New Lines Of Business

The U.S. Postal Service is seeking permission from Congress to enter new lines of business, hoping to boost revenue at a time when traditional mail volumes are posting double-digit losses, putting the Postal Service into a deep financial hole.A green light from lawmakers could allow 30,000 post offices to offer banking and insurance products, renew drivers' licenses or sell pre-paid cellular telephone service, offsetting hits from the recession and a shift to electronic bill payment."We cannot just sell stamps in those outlets," U.S. Postmaster General John Potter said at a Senate Homeland Security and Governmental Affairs subcommittee hearing Thursday.While Potter stressed that the Postal Service hasn't spent a nickel exploring alternative businesses, he said it would do so if lawmakers lift a ban on non- postal business.
"I think we'd be prepared very quickly to test it," Potter told reporters after the hearing, saying, "there have been enough people knocking on our door," that the Postal Service would have plenty of options to choose from.
Sales of pre-paid cellular telephone service are one of the ideas that have been pitched, according to Potter, who declined to name the firm or firms that made the pitch.
In addition to looking for new sources of revenue, the Postal Service is aiming to cut costs and obtain short-term relief from a $5.8 billion health-care bill that comes due Sept. 30.
The postal service expects to post a loss of more than $7 billion this year and probably won't have enough cash on hand to cover the hefty pre-payment for retiree health benefits. Congress is looking to provide relief by increasing the Postal Service's borrowing authority and temporarily lowering retiree health pre-payments.
Sen. Thomas Carper, D-Del., chair of the Senate postal subcommittee and sponsor of a bill to ease the Postal Service's cash crunch, said he wants to give the Postal Service "breathing room" as it considers longer-term changes such as closing postal facilities and moving from six- to five-day-a-week mail delivery.
Potter testified in support of the Senate bill, saying that if Congress doesn't act in time, the Postal Service will skip some or all of the pre- payments for retiree health benefits. He expressed optimism that the Postal Service will be able to ramp up the payments in five years' time, helped in part by cost-cutting efforts.
Eliminating Saturday delivery service would save $3.3 billion a year and savings would kick in immediately, Potter told the Senate panel. Just 11% of mail is delivered on Saturday and many businesses are closed then, said Potter, making it a good choice as the Postal Service pushes to curtail carrier delivery to five days a week.
In another cost-cutting move, the Postal Service has a list of about 675 postal facilities that could be closed, chiefly in cities and suburbs. Potter played down alternatives such as a big increase in postal rates, saying that would "drive mail away," further depressing revenue.
Sen. Joseph Lieberman, I-Conn., said lawmakers aren't happy about closing post offices or going to five-day-a-week mail delivery, but may have to accept such changes to keep the Postal Service afloat. He predicted the full Senate would likely act on the postal bill, S.1507, when it returns in September.
Sen. Susan Collins, R-Maine, supported giving short-term relief to the Postal Service but questioned whether it would be financially stable enough after five years to make the requisite retiree health fund payments. She also questioned the Postal Service plan to enter non-postal business, noting past forays "had very little success."
Phillip Herr, the Government Accountability Office's director of physical infrastructure issues, told the panel that the bill is "a short-term fix," and suggested lawmakers demand longer-term restructuring of the Postal Service that would put it on a sounder financial footing. He said the Postal Service has 50% excess capacity in mail processing facilities and suggested it use early retirement incentives to streamline its workforce and cut labor costs.
Prospects for the Senate bill could be clouded by opposition from postal labor unions, which object to a mandatory arbitration provision. Union officials testified Thursday that although they support the bill's goals, they believe the arbitration provision undercuts the collective bargaining process, and they vowed to opposed the bill unless the provision is stripped from it.

Source-nasdaq