Potter: Attacks Cost USPS $50M

Postmaster general Jack Potter has estimated that the Sept. 11 terrorist attacks will cost the U.S. Postal Service $50 million, and that the figure could go even higher.

Potter told the Senate Governmental Affairs Committee's subcommittee on federal services that half of the money is needed for repairs to the Church Street postal station in lower Manhattan. The facility at 90 Church St., which also houses several other federal offices including the Internal Revenue Service, is across the street from the site of the World Trade Center.

The remaining $25 million is needed to cover emergency ground delivery contracts, air taxi service and an estimated $1 million a day in lost revenue, he said.

However, Potter said, “I'm happy to say that the mail moved, [and] it is moving,” in the wake of the attacks. But some deliveries have been slowed by limits on air transport, he said.

“People have to be somewhat patient with us,” he said.

Potter said commercial airlines are carrying letter mail and that packages are moving on cargo planes, trucks and trains. Special arrangements have been made to fly mail to Alaska, Hawaii and Puerto Rico, he said.

Potter said that as soon as the scope of the attacks became clear Sept. 11, the agency evacuated its downtown Washington headquarters and activated an operations center outside the city to coordinate the movement of mail.

The post office activated plans to move mail by ground, he said, calling on thousands of trucking companies that are usually contracted to help at Christmas and getting Amtrak to add mail cargo cars to its trains.

FedEx, which usually flies about 3 million pounds of mail daily, began hauling mail on its trucks, he said, and the postal service sent its own trucks to airports where commercial planes had been grounded.

Besides speaking of how the terrorist attacks affected postal operations, Potter addressed postal finances and the agency in general and warned of problems ahead.

He told the subcommittee that though the USPS is working to reduce costs, “rising energy and healthcare costs and an uncertain economy have continued to challenge us. …Even before last [month's] terror attack, we expected that mail volume would not keep pace with the annual growth in new households. Fiscal year 2001 will show a deficit in the range of $1.65 billion, the second straight year of losses. For FY 2002 projection, we are looking at a deficit of $1.35 billion.”

Potter said he recently announced the most sweeping organizational changes at the postal service in 10 years. The agency reduced the number of officers by 20 percent and will eliminate more than 800 headquarters and headquarters-related positions, he said.

In addition, “we have eliminated two of our 10 field area management organizations,” he said. “The eight remaining areas will accelerate efforts to achieve a 30 percent staffing reduction.”

He also said the agency's plants and district offices will reduce administrative staffing 10 percent “without affecting the collection, processing and delivery of the nation's mail. Success with new automated equipment will also permit us to consolidate a number of processing facilities and operations. These will be announced in mid-October, with implementation in January 2002.”

Though the USPS has asked for expedited consideration of a proposed rate increase for next year, that does not mean it would take effect as soon as a decision is issued, Potter told the subcommittee. A decision on when to raise prices depends on factors such as changes in the national economy, mail volume and the result of several union contracts now under arbitration or negotiation, he said.

Potter also said the agency is asking Congress to speed payments on $957 million it owes the postal service for past services. The money had been scheduled to be repaid, interest-free, over 42 years.

Congress and the U.S. comptroller general have asked the agency to develop a comprehensive transformation plan to serve as a long-term blueprint, Potter said.

Responding to questions about the agency's e-commerce initiatives, Potter said the USPS “has to be in the Internet” and is not abandoning e-commerce. But some Internet ventures are not making money and will be re-evaluated, he said.

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