US Postal Service faces storm of protest over cutbacks

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The USPS seeks to close almost 700 offices and cut deliveries to tackle $7bn loss, in a crisis matching the Royal Mail's troubles

The US Postal Service is facing staunch opposition over plans to shut hundreds of offices as the problems faced by Royal Mail are matched across the Atlantic.

The USPS is also planning to scrap Saturday deliveries as it runs up losses of more than $7bn (£4.2bn) in one of the worst financial crises in its 234-year history.

The recession and the emergence of electronic commerce has prompted a dive in lucrative marketing-driven junk mail, causing a 9.3% drop in the number of items handled by the service during 2008.

America's postmaster general, John Potter, has asked Congress for permission to reduce the statutory requirement of six weekly delivery days to five. Last week, the service published a list of almost 700 smaller post offices at risk of closure.

The branches under threat are predominantly in urban areas and are considered a relatively short distance from other neighbourhood post offices. But the measure has caused consternation among politicians, unions and customers.

"The Postal Service cannot expect to gain more business, which it desperately needs, if it is reducing service," said Susan Collins, a Republican senator from Maine.

William Burris, the president of the American Postal Workers' Union, described the potential shutdowns as "acts of surrender – when the outcome of the battle is still in doubt".

The service, which can trace its origins back to the appointment of Benjamin Franklin as the country's first postmaster general in 1775, lost $2.4bn in the three months to June as the number of letters and parcels in the mail fell by 7bn to 41bn items.

Proposed cost reductions of $6bn include early retirement programmes, a freeze on executive salaries, cuts to travel budgets and a proposal to restructure a retirement healthcare fund for workers which requires funding of between $5.4bn and $5.8bn annually. But even with these savings, the USPS expects to lose more than $7bn this fiscal year.

Potter told a Congressional committee that the USPS, which is government-owned but has required no subsidy in recent years, was reaching a "breaking point".

Critics say that Congress's insistence on minimum service levels is a relatively recent phenomenon. As recently as the 1950s, many Americans were obliged to collect their mail from post offices, rather than receiving daily deliveries, and the mandatory requirement for a six-day service began in the 1970s.

"The government has cut subsidies but hasn't given the Postal Service's administrators a free hand in pricing," said Richard John, an expert in the USPS's history at Columbia University. "They're put in an impossible position."

Towns and cities across the US are abuzz with dismay at the prospect of closures. In the Texas city of Arlington, near Dallas, local customer David Scott told the Fort Worth Star-Telegram that closing his local downtown branch would "stink", adding: "It's convenient to be able to come and do your business downtown. A shame to take that away."

In New York, congressman Anthony Weiner attacked the USPS for releasing information in "dribs and drabs": "It's no wonder that they have been losing business. If their intention was to raise alarms, what they've really done is raise questions about their management."