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Facing budget shortfalls, Postal Service plans slower mail

USPS mailboxes

Facing billions of dollars in annual losses, the U.S. postal service announced plans Monday to cut back its capacity for delivering regular mail quickly and focus on letters and packages that are not urgent.

The postal service now delivers mail the next day for first-class letters within a certain radius, a promise that is going away for the first time since the modern postal service was created in 1971.

And letters that used to take two days to arrive will now likely take three days to arrive, though a small fraction of two-day mail will still arrive the second day. Three-day mail will not be pushed out to four-day mail.

David Williams, a vice president of network operations for the U.S. Postal Service, said his agency is "not writing off" first class mail, but "our network is simply too big" and postal service executives are "adjusting our operational reality to the current market" and, more importantly, future projections of future losses.

Millions of mail customers have turned to the Internet for email and bill payment, resulting in billions of dollars in lost revenue for the agency, among the nation's largest employers.

"We have to do this. We have to make this change in order for the postal service to become financially viable," Williams said, adding that the agency is projecting a $14 billion loss this year.

Williams said the postal service asked for permission to shutter about 252 of the 487 facilities used to make sure letters reach their destination the next day. The closures would save the agency about $2.1 billion in annual savings.

Asked about the cost of operating small post offices in rural areas, Williams said the agency was also looking at eliminating some of those locations as a way of cutting costs, but today's announcement was focused on the large mail processing facilities that customers almost never see.

Williams said the agency also hopes to eliminate 28,000 jobs by the end of next year. The agency employs more than 500,000 workers.

Monday's announcement is just one step in a larger effort to turn around the finances of the cash-strapped agency.

Postmaster General Patrick Donahoe has warned that Saturday service could be on the chopping block.

And Donahue said in July that service on just three days a week could become reality.