The U.S. Postal Service - burdened with a staggering amount of debt and obligations as well as the fact that fewer letters are mailed every year - will force millions of Americans to change their habits by canceling Saturday mail service.

Wednesday's announcement was a blow for those who still rely upon old-fashioned mail for critical correspondence or payments that still arrive in the form of a check.

At the branch post office in Old Torrance on Wednesday, Angelo Galvez was not happy to hear of the planned postal cutbacks. Galvez works for a Carson business that retrieves medical records for life insurance companies.

"This is going to cause delays for the life insurers. They want to get those records as soon as possible," Galvez said.

A 25-year veteran U.S. mail carrier who identified himself only as Keo delivers mail as he walks his route in Los Angeles Wednesday, Feb. 6, 2013. The
A 25-year veteran U.S. mail carrier who identified himself only as Keo delivers mail as he walks his route in Los Angeles Wednesday, Feb. 6, 2013. The financially struggling U.S. Postal Service wants to stop delivering mail on Saturdays but continue to deliver packages six days a week under a plan aimed at saving about $2 billion a year. (AP Photo/Damian Dovarganes)
"It could be an inconvenience for the applicants."

Despite the fact that banks and many other companies encourage online bill payments and the long-established trend of email replacing paper mail, one less day of mail service may be a problem for consumers and business owners.

Businesses and consumers have until the week of Aug. 5 to prepare for the Postal Service to put an end to Saturday mail deliveries. The service is set to continue Saturday deliveries of parcels.

The Claremont Courier, a community newspaper, is one enterprise that must change its plans. The Courier has historically mailed its newspapers to subscribers on Wednesdays and Saturdays but will switch to a weekly format that publishes on Fridays as of March.

"The Courier will reinvest the print savings into a larger paper, with better newsprint, more color and stories. Our website is already updated daily, so we feel this will help bring our readers news in a timely fashion," publisher Peter Weinberger said.

What may prove a serious inconvenience for business owners may be close to a matter of survival for the U.S. Postal Service. The service, in various forms, has been a part of American history since the days before independence and now faces an imperative to transform its business model.

THE FACTS

Canceled: The financially struggling U.S. Postal Service will stop delivering mail on Saturdays but continue to disburse packages six days a week. The Saturday mail cutback is to begin in August and should save about $2 billion annually.

Postage due: The agency in November reported an annual loss of a record $15.9 billion for the last budget year and forecast more red ink in 2013.

First-class woe: The agency's biggest problem - and the majority of the red ink in 2012 - was due to mounting mandatory costs for future retiree health benefits, accounting for $11.1 billion in losses.

Offices: Post offices now open on Saturdays would remain open on Saturdays.

If present trends continue, the Postal Service's future may be in serving as a conduit for Internet retailers rather than a means for friends, family and business associates to communicate.

"As consumers increasingly use and rely on delivery services - especially due to the rise of e-commerce - we can play an increasingly vital role as a delivery provider of choice, and as a driver of growth opportunities for America's businesses," Postmaster General Patrick R. Donahoe said.

Postal officials had considered ceasing all Saturday deliveries but decided package deliveries are strong enough to continue weekend service.

The Postal Service expects to save $2 billion by canceling Saturday mail deliveries, but that amount is a pittance when compared to the $15.

A flag waves in front of the United States Post Office Terminal Annex building in Los Angeles, Wednesday, Feb. 6, 2013. The financially struggling U.S.
A flag waves in front of the United States Post Office Terminal Annex building in Los Angeles, Wednesday, Feb. 6, 2013. The financially struggling U.S. Postal Service wants to stop delivering mail on Saturdays but continue to deliver packages six days a week under a plan aimed at saving about $2 billion a year. (AP Photo/Damian Dovarganes)
9 billion the service lost during its most recent fiscal year.

"Closing Saturday services is necessary, but probably not sufficient," said James O'Rourke, a management professor at Notre Dame who studies the Postal Service's operations.

The service's problems include high labor and retirement costs, cash shortages, massive debt and declining mail volumes as American consumers and businesses divert correspondence, bills and payments from hard copy communications to digital formats.

But change is not the biggest factor in the agency's predicament - Congress is. The majority of the service's red ink comes from a 2006 law forcing it to pay about $5.5 billion a year into future retiree health benefits, something no other agency does. Without that payment - $11.1 billion in a two-year installment last year - and related labor expenses, the mail agency sustained an operating loss of $2.4 billion for the past fiscal year, lower than the previous year.

Congress also has stymied the service's efforts to close some post offices in small towns.

Even so, the Postal Service may not be in its final days. The service's package deliveries have actually grown, and there is still a large percentage of Americans - perhaps as large as 33 percent - who do not have access to the Internet and need paper mail to go about their lives.

"You can't move everything by e-mail, and if you choose to shut down the Postal Service, you have chosen to exclude one-third of the country," Rourke said.

THE PROBLEMS

Revenue: Lost $25 billion from fiscal year 2007 to 2011.

Volume of mail: Dropped 22 percent between 2007 and 2011 thanks in part to the Internet.

Federal money: Does not receive any. Must get Congress' permission to change rates, reduce services or change its operations.

Pre-funding retirement: Required to make annual payments of nearly $5.5 billion for future retirees. This accounts for 70 percent of its losses last year.

Premiums: Employees do not pay any portion, compared with the two-thirds paid by other federal government employees. If they paid that proportion, it could save about $500 million annually.

 

The U.S. Postal Service's history began when Benjamin Franklin served as the Continental Congress' first postmaster general, overseeing mail deliveries in the colonies during the early stages of the War of Independence.

Post offices evolved into one of the federal government's most important functions, and postmasters general held Cabinet status through much of the 19th and 20th centuries.

The past decade, however, has been a tough one for the Postal Service. First-class mail deliveries - still the service's most important business segment - have fallen from 102.4 billion pieces in 2002 to 73.5 billion in 2011.

The Postal Service's total revenues declined from nearly $75 billion in 2008 to $65.2 billion last year, with reduced incomes from first-class and standard mail pulling down overall earnings.

One bright spot, however, is that the Postal Service revenues from package shipping have increased from $10.5 billion in 2012 to nearly $11.6 billion last year.

Robert Kleinhenz, chief economist for the Los Angeles County Economic Development Corp., said package deliveries are likely to hold steady for the Postal Service.

First-class mail volumes will likely continue to decline, but not disappear, he said.

Rialto business owner Trisha Kinney is among those who continue to rely upon the mail service.

On a scale, of one to 10, Kinney said the end of Saturday mail delivery will likely rank as a 7 in terms of inconvenience.

Kinney co-owns Rialto Trophy with her husband, Todd, and although they do not transact business with customers on Saturdays, that's the day when they often receive mailed checks from their customers.

"It may only be a day or two, but sometimes that cuts into deadlines, and it's a trickle-down effect," she said.

The Postal Service has also tried to control costs by closing branches and processing centers or reducing hours.

Sergio Munoz, a Long Beach resident, said reduced hours at the Long Beach post office have already been a hardship. Having one less day to receive mail may delay his ability to get information from his medical providers.

"It's bad (for me)," said Munoz, who uses a wheelchair. "I receive mail from my doctor."

Elsewhere, the processing center in the City of Industry is scheduled for closure in 2014, and the Mack Robinson post office in Pasadena ceased processing operations in July but is still open as a storefront.

Postal officials have reversed a decision to close another processing center in Redlands, but that city's historic Spanish-revival post office near its downtown is on the service's closure list.

Since 2006, the Postal Service has cut some 28 percent of its workforce - 193,000 people.

Future cuts - and labor battles - may be on the horizon.

O'Rourke said that the Postal Service's future likely relies upon becoming a "leaner" organization and renegotiating retirement plans.

The National Association of Letter Carriers responded to Wednesday's announcement by demanding the postmaster general's resignation.

Congress has previously blocked the Postal Service's attempts to end Saturday deliveries. Postmaster General Donahoe is basing his plans on a legal gambit to make the move without lawmakers' approval, since the federal government is funding operations with a temporary spending measure instead of an actual appropriations bill.


The Associated Press contributed to this report.