Postal Service proposes slowing first-class mail delivery

Most Americans are just an email, Tweet or Facebook update away from reaching someone else — or the entire world. And the trend is accelerating, as the number of email accounts alone is expected to grow by almost a billion worldwide from last year to 2014.

Now, the U.S. Postal Service has practically conceded that it's being left in the digital dust.

The Postal Service proposed Monday changing its first-class delivery standard so mail will arrive two to three days after it is shipped, rather than as early as overnight. The current standard, in place since the 1970s, enables the agency to complete nearly half of first-class mail deliveries overnight.

The change — which could affect a broad swath of consumer life, including slower deliveries for DVD rentals, magazines, greeting cards and bill payments — comes amid a drastic decline in first-class mail.

In 2001, such deliveries peaked at 103 billion pieces, according to the Postal Service. This year, 73 billion pieces are expected to be delivered — a level that hasn't been seen since the mid-1980s. And the agency forecasts further steep declines.

"The customers are making their choices, and what we're doing is responding," said David Williams, vice president of network operation for the Postal Service, said during a news conference.

Change is needed because the agency's vast network of thousands of facilities and post offices, and thousands of employees, is too large for the dwindling volume of first-class mail, Williams said. It plans to reduce operating costs by $20 billion over the next four years, mainly by shrinking its capacity to deliver mail.

"The fact of the matter is, our network is too big," Williams said at the news conference in Washington. "Our capacity is too big for what we can afford."

Some Baltimore residents expressed concern about the change and what it means for customer convenience. They also acknowledged a dwindling reliance on postal deliveries.

Leland Strott, an executive assistant at a Timonium company that works with nonprofit associations, said she does nearly all of her communications electronically.

"It's Christmas card season, and I like to mail them, but for the most part, I'm in the digital age when I need to send information quickly," Strott said.

Still, she worried that the changes will make the agency less and less important to Americans. "By becoming more inconvenient, that'll lead to the demise of the Postal Service faster," she said.

The move is expected to save the Postal Service $2.1 billion a year. The agency reported last month that it had lost more than $5 billion in the previous fiscal year; losses could be as high as $14 billion in the current year, officials said. The agency has struggled with billions of dollars in debt and high health benefit costs for future retirees.

The entire mail service is projected to bring in $65 billion in revenue this year, compared with $75 billion four years ago, according to a Postmaster General's report to Congress in September. About half of the Postal Service's revenue typically comes from first-class mail.

The proposed change's impact on consumers is unclear. The Postal Service window for delivery of periodicals, now set at one to nine days, would shift to two to nine days.

AdAge, a trade publication, surveyed several major magazine publishers, including Time and The Economist, and found that the Postal Service changes could disrupt timetables geared toward weekend delivery.

Some were exploring alternative delivery options, such as partnering with newspaper companies for delivery or moving deadlines earlier, according to AdAge.

Some Internet businesses have built their services by using the Postal Service to respond quickly to customers. Netflix, the DVD-by-mail subscription service, relies on a quick turnaround of first-class delivery for its discs.

The company declined to comment on the proposed postal changes.

Michael Prachter, a Wedbush Securities research analyst who follows Netflix, said he felt bad for the company, whose stock price plummeted in recent months as it raised subscription costs. He estimated that the Postal Service changes would have no impact on a little more than half of Netflix customers, who typically watch movies on the weekends and return movies during the week.