US Postal Service halts non-essential spending as cash crisis deepens

By David Shepardson

May 28 (Reuters) - The ‌U.S. Postal Service ​said Thursday ​it is suspending non-essential spending on travel, office supplies and consultants as it faces a mounting cash crisis.

Postmaster General David Steiner told officers in ‌a memo dated Tuesday seen by Reuters that the moves were "to protect core ⁠operations and ensure we can continue meeting all essential obligations."

USPS has reported net losses of about $120 billion ‌since 2007, as first-class mail, its ‌most profitable product, has fallen sharply with the shift to digital communication, while the agency must maintain costly nationwide delivery operations.

The memo orders a freeze on discretionary purchases ​of office supplies, equipment, software, training, system upgrades or bulk supply orders beyond near-term needs.

USPS confirmed the memo and said the measures represent additional self-help actions "to address our ongoing financial ⁠crisis."

Earlier this month, USPS reported a net quarterly loss of $2 billion and warned it could run out of cash as soon ​as February.

Mail volumes fell another 6.3% in the three months ending March 31, while operating revenue rose 2.3% to $20.2 billion from a year ​earlier.

USPS has taken a number of steps to ‌conserve cash and asked Congress for financial reforms. Last month, the Postal Service said it would temporarily suspend employer payments for a federal ⁠pension program and plans to raise the price of first-class mail stamps to 82 cents from 78 cents, effective July 12.

"We certainly can do some work on our cost structure, but long term, ⁠in order for the Postal Service to stand alone, we absolutely have to grow," Steiner told Reuters this ​week.

Suspending employee pension contributions will conserve $200 million in cash every two weeks, or $2.5 billion through September 30.

Earlier Thursday, USPS said it reached a multi-year deal with DHL eCommerce, expected to be worth more ‌than $10 billion, to handle the German company's last-mile parcel delivery services in the U.S.

Last month, USPS won approval for a temporary 8% price ‌hike for priority mail and package deliveries to offset rising transportation and fuel costs. USPS plans ⁠for the surcharge to be in ‌effect through January 17, 2027.

In ​March, Steiner said the Postal Service was hiring restructuring advisers to help address its financial troubles.

(Reporting by David Shepardson, Editing by Franklin Paul and ‌Sanjeev Miglani)

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