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US Postal Service mulls 5-day-a-week delivery
January 29, 2009 / 8:11 PM / 9 years ago

US Postal Service mulls 5-day-a-week delivery

WASHINGTON, Jan 29 (Reuters) - The financially squeezed U.S. Postal Service is asking reluctant lawmakers to lift a 26-year-old requirement that it deliver mail six days a week.

Postmaster General John Potter made the surprise request at a U.S. congressional hearing on Wednesday, saying it may have to cut deliveries to five days a week.

The proposal may have little impact on rival U.S. package delivery giants United Parcel Service Inc (UPS.N) and FedEx Corp (FDX.N). Both companies carry express mail for the U.S. Postal Service under contract.

Analysts said if the overall volume of mail remained unchanged, it would not matter to UPS or FedEx whether the postal service delivered mail five or six days a week.

Democratic Senator Tom Carper, who chaired the hearing, would like to see the Postal Service explore other options, his spokeswoman said on Thursday.

The Postal Service has been facing shrinking revenues due to reduced mail volume, largely because of rising electronic communications and the rising costs of delivering mail.

At Wednesday’s hearing, Potter said: ”It could become necessary to temporarily reduce mail delivery to only five days a week.

”Toward this end, I reluctantly request that Congress remove“ an annual requirement dating back to 1983 that it deliver mail six days a week,” he said.

OPTIONS

Potter did not specify a day to possibly stop service. While some have suggested in the past halting Saturday deliveries, doing so would mean a buildup of mail every weekend since there is already no delivery on Sundays.

Earlier postal-service studies examined the possibility of halting delivery on days when mail is relatively slow, such as Tuesdays.

Potter asked Congress to ease a multibillion-dollar requirement that it prepay health benefits for future retirees without removing its obligation to provide such coverage.

Carper said reducing mail delivery “wouldn’t be his first choice as a means to cut losses” and would prefer a rescheduling of health payments, his spokeswoman said.

She said Carper would like to see the postal service become more efficient without any cuts in its workforce.

Keith Schoonmaker, an analyst at Morningstar, said he saw limited scope for either UPS or FedEx taking business from the U.S. Postal Service, especially during a recession. Both UPS and FedEx have reported that some customers have switched from higher cost air express services to slower ground delivery services to save money in the downturn.

“It’s hard to imagine that people will pay a premium for mail they’re currently sending first class to have it shipped by FedEx or UPS,” Schoonmaker said. “I don’t see this (five-day delivery) having any material impact on either company.”

UPS is the world’s largest package delivery company. Deutsche Post AG (DPWGn.DE) unit DHL will halt its U.S. domestic package service on Jan 30.

Reporting by Thomas Ferraro in Washington and Nick Carey in Chicago; Editing by Howard Goller

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