News

U.S. Postal Service Implements Cost-Saving Measures

James L. Flint

• August 09, 2023

The U.S. Postal Service is undergoing significant changes in an effort to improve its financial health. According to U.S. Postmaster General Louis DeJoy, the service has successfully decreased its volume of shipments by aircraft by 90% in just two years. This adjustment has positioned the Postal Service to save a substantial $1 billion in annual transportation costs.

To achieve these savings, packages and envelopes have been shifted from air cargo to ground transportation. Currently, over 95% of first-class mail and first-class packages are being processed through the Postal Service's ground transportation system. This transition is part of a broader initiative to reduce operating costs, increase revenue from packages, and ensure timely deliveries.

In addition to these changes, the Postal Service plans to address inflation and expand its delivery network over the next 17 months. The goal is not only to mitigate rising postage costs but also to improve efficiency for customers.

However, despite these efforts, the Postal Service is facing significant challenges. It has projected unexpected costs totaling $6 billion this year, primarily due to inflation and unforeseen retirement expenses. To counteract these expenses, Chief Financial Officer Joseph Corbett stated that the Postal Service is managing costs within its control. For instance, work hours have been reduced by 6 million compared to the same quarter last year, and there is a focus on optimizing transportation and other operating costs.

Amidst these challenges, there are positive developments as well. The Postal Service recently opened its first regional distribution center in Richmond, Virginia. Furthermore, plans are underway to open nine more regional centers, 27 local processing centers, and 60 additional sorting and delivery centers. These expansions will help address over $20 billion in deferred maintenance and prepare the Postal Service for the next 30 years.

In conclusion, the U.S. Postal Service is actively implementing cost-saving measures and strategic changes to enhance its financial stability and service quality. By transitioning to ground transportation for a majority of shipments and taking steps to reduce operating costs, the Postal Service is making significant progress towards its goals.