USPS has decided to speed up its cost-saving cuts after the outgoing US Congress failed to agree onurgently-needed postal reform.
As the result of the failure on the part of the 112th Congress to pass new postallegislation, the USPS Board of Governors has ordered the company’s management to accelerate therestructuring of its operations with various cost-cutting and revenue-generating measures. Thiscomes “in the face of an unprecedented set of financial challenges, heightened by the inability ofCongress to pass comprehensive postal legislation”, USPS explained.
The postal operator stressed that it cannot wait indefinitely for the legislation as it needsto further reduce costs in order to improve its financial situation. But it still wants legislationto be passed to give it more flexibility to control costs and generate new revenues and “encouragesthe 113th Congress to make postal reform legislation an urgent priority”.
In particular, the Board of Governors has approved the company’s restructuring initiativesand urged it to review its five-year cost-cutting plan announced last year to improve the currentfinancial and liquidity conditions.
The US postal operator said continues to implement its major cost-cutting initiativesthroughout its retail, delivery and mail processing operations. Since 2006, the company has cut itsannual costs by approximately $15 billion and reduced its workforce by 168,000 staff, or about 24per cent.
“Despite achieving record growth in its package business and stabilisation of other revenues,the Postal Service continues to operate with an inflexible business model that hinders its abilityto be self-sufficient,” the US postal operator said.
USPS made a massive $15.9 billion loss in the year ending September 30, 2012, largely due to$11.1 billion worth of disputed employee health payments, compared to a $5.1 billion loss theprevious year. The agency wants Congress to remove the financial burden of having to prefundretiree health benefits as well as to give it more commercial freedom and permission to downscaleoperations and infrastructure in order to cut costs. Under its business plan, USPS wants legalchanges allowing it to determine delivery frequency and the ability to offer non-postal productsand services.
