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Postal Office Planning to Drop Saturday Service

WASHINGTON - The U.S. Postal Service must make drastic changes to avert a projected loss of $238 billion over the next decade, including closing post office branches and raising prices, Postmaster General John Potter said Tuesday.

The Postal Service also released further details about its proposal to scale back to five-day-a-week delivery, saying it wants to eliminate Saturday deliveries. The move from six days to five could save $3.3 billion a year, Potter said.

A $4.8 million study commissioned by the Postal Service predicts mail volume will fall from 177 billion pieces in 2009 to 150 billion pieces in 2020, while costs for labor and fuel rise. The Postal Service is not funded by taxpayers and must rely on revenue from stamps and other postal services. It has borrowed about $10 billion from the U.S. Treasury and expects to borrow $3 billion more this year.

"It's reflective of a macro change in how society communicates," Potter said, noting the migration of mail, including bills, to the Internet.

The Postal Service needs Congress to give it flexibility to respond to a changing business and communication climate, said Louis Giuliano, chairman of the Postal Service's Board of Governors and former CEO of ITT Corp.

"Raising the debt limit is not the answer," Giuliano said. "We need to do these things quickly and aggressively."

The Postal Service sought permission last July to shutter or consolidate 154 post offices. The independent Postal Regulatory Commission will issue its advisory opinion on the closures this month.

The Postal Service has 36,500 retail branches, more than McDonald's, Starbucks, Walgreens and Wal-Mart combined, Potter said. An average branch sees 600 customers each week, while an average grocery store has 20,000 weekly customers, he said.

"We have people behind counters who may have 100 customers per week," Potter said.

He said the Postal Service is working to establish postal stations within existing businesses - such as groceries, office supply stores and discount retailers - before asking Congress to allow it to close post office branches. The Postal Service estimates that shutting branches would save $10 billion a year. Federal law bars the service from closing branches for economic reasons.

"We need to make sure alternative access is available before we do anything to an existing outlet," Potter said Tuesday.

Potter said he also will ask Congress to allow the Postal Service to pay retiree health benefits as needed rather than pre-funding a health care account for future retirees. That would put the service on the same plan as other U.S. agencies.

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