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)
