Bloomberg News

U.S. Postal Service Says It May Shutter 3,700 Post Offices

July 26, 2011

(Updates rural post offices in fifth paragraph.)

July 26 (Bloomberg) -- The U.S. Postal Service, which may run out of money in September, said it may close as many as 3,700, or 12 percent, of its post offices as customers buy more services online and through locations such as grocery stores.

Post offices in every state but Delaware may close, according to a list provided by the USPS today. More than half are in rural locations, said Sue Brennan, a spokeswoman for the service. In communities without a post office, the USPS plans to sell stamps and offer services through local retailers.

The postal service, which reported a loss of $2.6 billion for the quarter ended March 31, is seeking to cut costs as it approaches its $15 billion borrowing limit. The closings may save $200 million a year by saving costs for labor and for operating the facilities, Postmaster General Patrick Donahoe said at a news conference in Washington.

“A lot of the decisions we make around our operations are based on the revenues that come into the operation,” Donahoe said. The USPS has almost 32,000 post offices.

The post office in Yellow Pine, Idaho, which has a population of 32, according to the 2010 census, is on the list for potential closing. So are stations in Avon, Montana, population 111; Craig, Nebraska, population 199; and Bradfordsville, Kentucky, population 294.

Eighty-four percent of the locations on the list take in less than $27,500 in annual revenue and have less than two hours of work a day, said Dean Granholm, delivery and post-office operations vice president.

Bygone Era

The post-office network was built for a bygone era and customers today need retail locations that are convenient for where they live and work, Granholm said.

“We are wholly dependent on the sale of postage for revenue,” he said. “Most businesses don’t operate locations that operate at a loss.”

Bigger cities are also on the list. New York City may lose 34 stations under the proposal. Manhattan’s 26 Federal Plaza office and the Port Authority are among its six potential closings, while 17 could close in the Bronx, and Brooklyn may lose five. Queens could lose five offices and Staten Island one under the plan.

Post offices in Newark, New Jersey and Hoboken among those being considered.

In Washington, 19 stations may be shut, including one in the U.S. Capitol and four in House of Representatives office buildings. The Agriculture, Labor, and State departments may lose offices as well. The post office at Walter Reed Army Medical Center, scheduled to close in September, is also listed.

Issa’s District

The potential closings also include one in Vista, California, represented by Republican Darrell Issa, chairman of the House Oversight and Government Reform Committee, which oversees the USPS. He has criticized the postal service for the size of its workforce and facility network.

The postal service is seeking permission from Congress to delay a required payment for future retiree health-care costs and to end Saturday mail delivery as it seeks to cut costs.

Donahoe said closings will be easier than previous attempts because of the plan to move services in areas with no nearby post offices to retailers.

Today’s list is the third grouping of postal retail facilities for possible closing since 2009. In January, the postal service listed about 1,400 post offices and has shuttered 280 of them, Brennan said. From the 2009 list of about 3,600, 140 closed.

The USPS taking the right steps to stem losses, said Gene Del Polito, president of the Association for Postal Commerce. The Arlington, Virginia-based group represents postal customers including L.L. Bean Inc., Lockheed Martin Corp. and Time Warner Inc.

“They have no other choice but to reduce redundant postal facilities,” Del Polito said in an interview. “I think they’re really serious this time. I get the sense that this is for real.”

--With assistance from Frank Bass in Washington. Editors: Andrea Snyder, Bernard Kohn

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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