USPS wants to limit next-day service

U.S. Postal Service is considering axing next day mail delivery.

WASHINGTON (CNNMoney) -- The U.S. Postal Service on Monday will announce a cost-savings proposal that would no longer deliver first-class mail on the next day.

The financially troubled agency will present to its overseers a proposal to change its national standard for first-class mail to two-to-five days from one-to-three, according to interviews with several mail industry officials who received a presentation by the agency this week.

"This isn't a change we're happy about," said Art Sackler, executive director of the National Postal Policy Council, a trade group for large mailers. "But if they don't cut somewhere and substantially, they're going to run out of cash next summer. It's one of the lesser evils."

Right now, customers on average receive mail the day after it was mailed, according the postal service. That may still happen, but a lot less frequently under the proposed rules, say the insiders who were briefed on the proposal.

The proposed rules are not a surprise. The postal service asked for public comment in September on "eliminating the expectation of overnight service" for first class mail. But it could have a major impact on customers, especially those who still use the mail to pay their bills.

It wasn't immediately clear when the plan could take effect.

"These changes are being proposed, because they will allow for significant consolidation of the entire postal network in terms of facilities, processing equipment, vehicles and employee workforce," said U.S. Postal Service spokeswoman Sue Brennan.

The Postal Service is on the brink of insolvency. It's facing another 20% drop in mail volume on top of the 20% volume drop it has already weathered. It has racked up $5.1 billion in debt this year and faces a deadline to make another $5.5 billion payment to its health care retirement fund on Dec. 18.

Lawmakers in the House and Senate are working on different bills to save the postal service.

Some areas of the country may still get next-day delivery, depending on whether their local mailing processing plant survives the next set of potential closures now under review. The Postal Service wants to bring the number of mail processing facilities down to under 200 from 463 that exist today, according to its 2011 annual report.

The paperwork announcing "service standard" changes will be filed with Postal Regulatory Commission on Monday, when more details will be released.

Attendees of a meeting this week of the Mailers' Technical Advisory Committee said postal officials discussed the proposed changes. Cutting back on next-day delivery of first-class mail would help make the mail processing system more efficient, postal officials said.

Right now, the Postal Service runs mail processing equipment about six hours a day, on average, said Jessica Lowrance, executive vice president of the Association for Postal Commerce. The goal is to run the equipment 20 hours a day, said Lowrance, who attended the meeting.

But the move could be quite controversial, especially among unions that oppose any moves that degrade the quality of mail service and cost mail customers.

Union groups want Congress to solve the agency's cash crunch by relieving it from the burden of having to make multi-billion dollar payments to a fund for future health care retiree benefits.

The agency is linking the service changes to its effort to close mail processing facilities, which often employ hundreds of workers. For example, a possible plant closing in Tulsa, Oklahoma, could affect nearly 600 employees.

These employees can't be laid off, per union contracts. But they can be forced to take a job that could be hundreds of miles away.

Consider the Oct. 1. closure of a mail processing plant in Sioux City, Iowa, which hit 95 employees. A half dozen employees retired early and 13 took jobs in Sioux Falls -- 82 miles away. Another 34 workers found employment within the postal service in Sioux City. The fate of another 22 employees is still unclear, according to the president of the postal union there.

"We have people who are 55 years old and spent their careers processing mail indoors and are now forced to carry mail in the elements in the Midwest," said Scott Tott, local president of the union local in Sioux City. "Yes, it disrupts lives."