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Post Office eyes alcohol deliveries to raise revenue

Friday, 2 Aug 2013 | 7:36 AM ET
United States Post Office
Timothy Fadek | Bloomberg | Getty Images
United States Post Office

Special delivery from the post office—beer, wine and spirits, if Postmaster General Patrick Donahoe has his way.

In an interview with The Associated Press, Donahoe said Thursday delivery of alcoholic beverages is on his wish list as the agency considers ways to raise revenue and save money after losing $16 billion last year. He also said he endorses ending most door-to-door and Saturday mail deliveries as a way to help stabilize the service's finances.

Donahoe said delivering alcohol has the potential to raise as much as $50 million a year. He mentioned how customers might want to, for example, mail bottles of wine home when they tour vineyards. Donahoe said his agency has looked at the possibility of using special boxes that would hold two, four or six bottles and ship for a flat-rate anywhere in the country.

"There's a lot of money to be made in beer, wine and spirits," Donahoe said. "We'd like to be in that business."

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The Postal Service says mailing alcoholic beverages is currently restricted by law. Customers are even told to cover any logos or labels if they use alcoholic beverage boxes for shipments.

The agency is also urging changes in how it delivers the mail. A House committee has passed legislation to stabilize the Postal Service's ailing finances that would cut letter deliveries to five days and phase out door-to-door deliveries over 10 years. The bill does not include a provision to allow the agency to deliver alcohol.

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The Senate passed a postal reform bill last year that included a provision allowing the agency to deliver alcohol. The bill would require that such shipments would have to comply with any state laws where the shipment originated and was delivered. The measure also said the recipient would have to be at least 21 years old and would need to provide valid, government-issued photo identification upon delivery.

The agency faces $15 billion in losses this year and is working toward restructuring its retail, delivery and mail processing operations.

"We don't want to take any more debt on," Donahoe said. "We want to be able to get profitable, pay it down, just like any other business would, so that you stay strong for the future."

The service's losses are largely due to a decline in mail volume and a congressional requirement that it make advance payments to cover expected health care costs for future retirees. About $11.1 billion of last year's losses were due to the health care payments.

(Read more: No more mail at your door? Delivery change eyed)

Donahoe said over the last decade, the mail volume at his agency's trademark blue boxes has dropped 60 percent.

"That's our most profitable mail," he said. "That will continue to drop off because people pay bills online. And we understand that, it's easy, it's free, and so we have to continue to make changes."

On a bright note, Donahoe said the volume of packages the service handles has grown considerably in recent years, a trend he expects to continue.

The House Oversight and Government Reform Committee recently approved a plan for the service to gradually shift from door delivery to cluster box and curbside delivery, which includes mailboxes at the end of driveways. The agency has been moving toward curbside and cluster box delivery in new residential developments since the 1970s.

About 1 in 3 mail customers has door-to-door delivery. Some lawmakers have complained that ending home delivery in many densely developed urban areas would be difficult and pose hardships for many people, including the elderly and places where the weather can be harsh.

"We'd work with the communities," Donahoe said, adding there would be special hardship exemptions for those physically unable to get their mail at centralized locations. "We want to figure out how to do it so people don't get mad."

Donahoe said there are ways to install centralized mail boxes that fit in well with the neighborhood and also don't cause a lot of hardship for customers.

Some 30 million residential addresses receive delivery to boxes at the door or a mail slot. Another 87 million residential addresses receive curbside or cluster box delivery.

Door-to-door delivery costs the agency about $350 per year, on average. Curbside delivery costs average $224 per year for each address, while cluster box delivery averages $160.

The service earlier this year backpedaled on its plan to end Saturday mail delivery after running into opposition in Congress. It has tried repeatedly and unsuccessfully over the past several years to persuade Congress to approve ending Saturday mail delivery.

The National Association of Letter Carriers has said ending Saturday delivery would in particular hurt rural residents and the elderly who depend more heavily on the mail for prescription drugs and other goods. Donahoe said there would be a six-month implementation period to help smooth out any problems and that medicines would still be delivered on Saturdays.

The Senate last year passed a bill that would have stopped the Postal Service from eliminating Saturday service for at least two years and required it to try two years of cost-cutting instead. The House didn't pass a bill.

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