The United States Postal Service announced today that it will transition to a new delivery schedule in early August that will cut Saturday mail deliveries from the government service's offerings.
The Postal Service will continue to deliver packages Monday through Saturday and expects the new plan to save approximately $2 billion annually. This newest initiative will most likely affect the operations of delivery services such as United Parcel Service (NYSE: UPS ) and FedEx (NYSE: FDX ) .
"The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America's changing mailing habits," Postmaster General and CEO Patrick R. Donahoe said. "We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings."
According to the Postal Service, approximately 70% of Americans support the switch to a five-day delivery schedule as a cost-saving mechanism for the cash-strapped government organization. The original proposal had also included cutting off Saturday package deliveries, but a 14% boost over the past few years, driven by e-commerce, persuaded the USPS to maintain its six-day package schedule.
This announcement is the newest in a series of major restructurings over the past seven years. Since 2006, the USPS has decreased annual costs by $15 billion, reduced its workforce by 28%, and consolidated more than 200 local post offices.