US Postal Service to cut $3 billion in costs

July 31, 2016

By Lillian Rizzo

The US Postal Service is expected to cut $3 billion in costs, which could lead to 28,000 job losses.

The United States Postal Service is looking cut back $3 billion in costs by eliminating one-day delivery of first-class mail and close nearly half of its mail processing centers across the country to avoid bankruptcy, ABC News reported.

Roughly 250 of its 500 processing centers will shut their doors permanently which would lead to longer distances for mail to travel from post office to processing center, the Associated Press reported. Senders will also see the end of next-day mail in neighboring communities.

"We have to do this in order for the Postal Service to become financially viable," said David E. Williams, vice president of network operations for USPS, Fox News reported.

Read more at GlobalPost: US Postal Serive: Stamp prices are going up

The Postal Service wants to cut $20 billion in operating costs by 2015 and is asking the Postal Regulatory Commission to let it relax delivery standards for first-class mail, the Boston Globe reported. Slower mail delivery would lessen the number of processing centers needed.

The government-run agency is expecting a $14.1 billion loss in 2012 as mail volume continues to drop. Williams said the USPS predicts another 47 percent drop in volume between now and 2020, Fox News reported.

If the postal service cuts half of its processing centers it will lead to 28,000 job cuts by the end of 2012. However, the cost cuts aren’t considered surprises after the USPS announced in September it was looking to cut back due to lower mail volume.

First-class mail is supposed to be delivered to homes and businesses within the US in one to three days and periodicals could take between two and nine days. About 42 percent of first-class mail is currently delivered the next day, 27 percent arrives in two days and 31 percent in three days, Fox News reported. If the latest cost-cutting changes go into effect next spring, about 51 percent of all first-class mail is expected to arrive in two days, the rest in three days.