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Economy still on way down, says US Postmaster General



US Postmaster general John Potter said the slumping economy that’s curbing mail volume and extending losses at his agency hasn’t hit bottom.



Mail volume may continue to fall, making it harder to return to profitability after a $1.9bn second-quarter loss, Potter said. The Postal Service is working to trim costs by eliminating routes and cutting jobs.



“I wish I could say we’ve hit bottom already,” Potter said during the National Postal Forum convention in Washington. “But we haven’t. Like all sectors, we are hoping for a turnaround.”



Potter, who has asked Congress for permission to reduce mail delivery to five days a week from six, said the Postal Service doesn’t expect to make the change soon. The agency is paring expenses in other ways, such as renegotiating supplier contracts and halting construction of new facilities, as it raises prices for mailing letters and packages.



“We have an infrastructure we cannot afford based on revenues we’re receiving,” Potter said.



Revenue dropped 11% to $16.9bn in the second quarter.



The economy, which shrank at a 6.1% annual rate in the first three months of 2009, will contract at a 1.9% pace this quarter, according to the median forecast of 61 economists surveyed by Bloomberg 4-11 May. It will return to growth, at a 0.5% rate, in the July-to-September period and will expand 1.8% in the final three months of this year, the survey showed.



The Postal Service has eliminated 21% of its workforce since the number of employees peaked at 803,000 in 1999, including 25,000 so far this year, Potter said. In the past six months, the agency has cut 2,000 of its 142,000 delivery routes in urban and suburban areas, with a savings of about $100,000 for each route, he said.



“What we really need to be talking about is, how do we find a path back to break-even and beyond break-even to profitability?” he said. “If the economy comes back, mail will come back. But I don’t think it’s going to come back to the levels that we’d seen.”



The Postal Service, which is asking Congress to change its retiree benefit funding requirements, needs to be able to take such actions, said Murray Martin, chief executive officer of Stamford, Connecticut-based Pitney Bowes, the world’s largest maker of postal meters.



“Mr. Potter and his team have been very aggressive about taking on a difficult challenge,” Martin said in an interview in Washington.



Source: Bloomberg