Sweeping changes needed to save US post office

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The 235-year-old US Postal Service must change the way it does business or risk going belly-up as the Internet eats into the mail market, driving post office revenues down, its head said Tuesday.

"Lifestyles and ways of doing business have changed dramatically in the last 40 years," but the USPS hasn't kept up, Postmaster General John Potter said as he presented a report by experts outlining ways to save the service.

From its foundation in 1775 until the advent of the Internet some 300 years later, the USPS "business model worked well because mail volume increased steadily as the nation grew," said the report by three consultancy groups.

But "new technology has changed how Americans communicate and do business," it said, pointing out that more and more Americans are paying bills or sending birthday cards electronically rather than by what some deride as "snail mail".

The junk mail and advertising fliers that used to land in mailboxes around the United States are now posted online or sent to people's email inboxes, taking away another source of revenue for the post office.

The sharp decline in mail volume is expected to continue throughout the next decade, with experts projecting the post office will carry 10 billion fewer letters and parcels in 2010 than last year -- 167 billion compared to 177 billion -- and only 150 billion pieces of mail by 2020.

Adding to the postal service's woes is a piece of legislation passed in 2006 which obliged the USPS to set aside 5.6 billion US dollars on average every year for retired employees' health benefits, and capped prices for mail services.

If none of that is changed, the USPS will be 238 billion US dollars in the red by 2020, the experts projected.

The report suggests a whole slew of measures to save the USPS, including ending mail deliveries on Saturday, which on its own would save the post office three billion US dollars a year.

More postal services should be offered through the very instrument that has contributed to its woes -- the Internet -- allowing customers to access most postal services without leaving their home or office, the report says.

Postal services kiosks should be set up in supermarkets and other places where people normally shop, and under-used post offices shut down, the report says.

And to become a leaner organisation, the USPS should not replace workers who retire with other full-time employees, but use more part-time workers.

Part-time postal workers currently make up just 13 percent of the USPS workforce, compared with 22 percent in Britain's Royal Mail and 40 percent in the Deutsche Post in Germany.