No Christmas Miracle at the Post Office

Dec. 11, 2009 — -- Will this year's holiday shipping season be the last for dozens of U.S. post office branches?

Bob Guitierrez hopes not. For more than four decades, the Kansas City business owner has been a loyal customer of his local Kansas Avenue post office station, which sits across the street from his food manufacturing plant, Art's Mexican Products. Today, it is one of more than 200 post office locations around the country that the U.S. Postal Service is considering closing as it grapples with revenue declines that led to a $3.8 billion loss this year.

Guitierrez's local station has limited hours but the service is friendly and he prefers it, he said, to independent shipping companies.

"The post office is more personal," he said.

The last few months have been a trying time for supporters of the 234-year-old government-run mail service. Over the summer, the U.S.P.S. began reviewing whether to close some 3,600 post office branches and stations of its 36,000 locations. The closure decisions, the U.S.P.S. said, would be based on factors such as delivery volumes per location and proximity to other post offices.

By last month, the postal service had culled its list of at-risk locations to 241. (Click here for the latest list.) The U.S.P.S. now says that if any of those branches are closed, it won't happen until February at the earliest -- but that's cold comfort to those who say they want to keep their local offices open for good, not just for a couple more months.

Even those mail fans relieved to learn that their neighborhood branches would be saved still have to contend with another unnerving possibility: Since January, Postmaster General John E. Potter has been pushing Congress to allow the postal service to cut its delivery schedule from six days a week to five, eliminating Saturday delivery.

"We have concluded that reducing the frequency of mail delivery from six to five days a week can provide the financial relief that is necessary to restore the fiscal health of the Postal Service," Potter told a Senate subcommittee during a hearing in August.

The change, Potter said, is "difficult but necessary."

Abandoning 'Snail Mail'

Even as the U.S. population and the number of places the post office delivers to grows, the U.S.P.S. is losing business like never before. It delivered 177 billion pieces of mail in its past fiscal year, a steep 13 percent drop from 2008 and a marked new low point for the decade. Since 2000, mail volume had bounced between the old low of 202 billion pieces of mail and and a high of 213 billion.

The recession helps to account for much of this year's decline -- cash-strapped businesses are spending less on mailings -- but the general trend of abandoning what many now call "snail mail" in favor of zippy Internet-based communication and transactions, including bill payments, is the more worrisome culprit for the U.S.P.S.

Now, "it's absolutely essential that we refocus our business effort to change with changing consumer behavior and the times," said U.S.P.S. spokesman Greg Frey.

Much of the post office's changes to date have involved shrinking -- it recently saved $6 billion by eliminating 12,000 postal carrier routes by cutting employees' hours, freezing salaries and stopping all new hiring, among other moves. Head count at the post office is down too: from 787,538 in 1999 to 623,128 this year.

But postal officials also insist there are bright spots on the post office's financial picture that actually involve expanding service rather than cutting. More customers have been using the U.S.P.S.'s Priority Mail flat rate boxes -- boxes that ship for a set price, irrespective of the contents' weight -- including a new, smaller-sized box option.

Priority Mail shipments generated more than $5.3 billion in revenue for the U.S.P.S. in 2009. That's $120 milllion less than Priority Mail brought to the bottom line the year before, but the drop is slight compared to the $2.3 billion revenue decline for first-class mail delivery this year.

Frey called Priority Mail "a runaway success."

"It works very well, it's reasonably priced and it's been well received," he said.

Cutting to Survive

Other advances touted by the U.S.P.S. include the sale of greeting cards at certain post office locations, the growing availability of stamps at numerous outlets beyond post offices and the advent of online shipping, through which customers print shipping labels from the U.S.P.S.'s Web site and then call for free package pickup.

For the short term, meanwhile, the postal service is looking forward to another busy holiday shipping season.

The U.S.P.S. expects that this Monday will be the busiest mailing day of the year, with more than 830 million cards, letters and packages expected to fill mail carriers' sacks, compared to 583 million on a typical day.

"We definitely have seasonality for our business," Frey said.

Critics, however, argue that no new revenue stream or holiday shipping bonanza will make up for the continuing drop in customer demand.

The postal service, which does not receive tax revenue, has no choice but to continue to cut costs through moves like shedding one day of delivery, said Rick Geddes, an associate professor at Cornell University and the author of "Saving the Mail: How to Solve the Problems of the U.S. Postal Service."

"If the U.S.P.S. does not cut costs in the face of declining demand, its demise will simply be accelerated," Geddes wrote in an e-mail to ABCNews.com.

"It is noteable," he added, "that the alternative is a taxpayer bailout, which is something that I think should be avoided at all cost."

Guitierrez in Kansas City, meanwhile, has his own suggestion for postal solvency.

"If they need to raise more money, all they have to do is raise the price of the stamps," he said, noting that the postal service has taken that step plenty of times before.

But in an October letter to customers, Potter made clear that that won't be an option -- at least not in 2010. Raising rates again, he wrote, would only drive business away.