USPS Challenges PRC Five-Day Analysis – Stands by $3.1 Billion Savings Estimate

WASHINGTON — In a report issued today and delivered to Congress, the U.S. Postal Service asserted that the Postal Regulatory Commission (PRC) based a recent advisory opinion on a questionable analysis of the potential cost savings that could be achieved by implementing a five-day delivery schedule to street addresses.

The Postal Service has estimated that making the move would yield a net annual cost reduction of $3.1 billion based on extensive market research and financial estimates provided to the PRC March 30, 2010. The PRC issued a nonbinding advisory opinion March 24, 2011 that concluded that transitioning from a six-day delivery schedule to a five-day street delivery schedule would only achieve $1.7 billion in net annual savings.

The $1.4 billion discrepancy between the respective estimates results from:

the Commission’s unwillingness to recognize about $760 million in savings from increased city carrier productivity and efficiency under a five-day schedule;

the Commission’s failure to account for more than $260 million in highway transportation and mail processing economies associated with one less day of street delivery; and the Commission’s summary dismissal of the unrefuted testimony of market research experts to reach its conclusion that the Postal Service estimate of annual revenue loss resulting from the change was understated by $386 million.

On the variances between the agency’s cost savings estimates, the Postal Service report questions the PRC assumption that “little, if any, efficiencies and increases in productivity would be realized in certain city carrier activities by delivering the same volume Monday through Friday instead of Monday through Saturday.” The PRC revenue loss estimate “is contradicted by the overwhelming weight of expert testimony … [and] falls short of the requirement that it be based on substantial record evidence.”

The Postal Service finds it unfortunate that the PRC relied upon a questionable financial analysis in developing its nonbinding advisory opinion.  The total impact of transitioning to a five-day delivery schedule will significantly improve the Postal Service’s financial stability by reducing annual net costs by about $3.1 billion annually. The report states that ”No other single action the Postal Service could take operationally will result in such large costs savings.”

Further, the Postal Service report explains that the Commission’s estimate of approximately $1 billion less in annual operational savings stems from the PRC’s use of its rate case approach to product cost analysis, which assumes a static network.  The PRC acknowledged in its Jan. 30, 2009 Report on Universal Service and the Postal Monopoly that such an approach fails to consider the operational impact of changing delivery frequency.

The Postal Service report vigorously disputes the PRC claim that the five-day delivery proposal did not sufficiently take into account the needs of customers in rural and remote areas. The Postal Service contends that its extensive market research considered the views of rural customers and incorporated them into its implementation plan. The Postal Service noted that the same market research methodology for considering the needs of rural customers was accepted by the PRC in its 2009 Universal Service report.

The Postal Service report regarding the March 2011 advisory opinion also criticizes the PRC for its inability to fulfill its core function in the nonbinding advisory process, which is to address whether the proposed service changes would be consistent with governing statutory policies.

USPS Report Re PRC Advisory Opinion

16 thoughts on “USPS Challenges PRC Five-Day Analysis – Stands by $3.1 Billion Savings Estimate





  3. 760 million in increased carrier productivity? That’s a bunch of bull! We already do all we can. What a joke!

  4. Sat. might as well be an off day as volume is lite and rural carriers work 5-6 hours and get paid evaluated time. only day come close tto working hours get paid for. Mon. is my off day.

  5. Am a retired employee..go to 5 day delivery.. I worked in downtown chicago area and we sat around on saturday doing little, since most of the business were closed on saturday… then if off on tuesday and someone was off overtime was given to cover Tuesday. while sitting around on saturday doing little.
    And if your a rural carrier your going to be working 6 days with no financial reward.. since the mail volume determines how many hours you work and that determines if your working 5 or 6 days a week….The one who want 6 days are only those making money from overtime..

    Don’t see UPS suffering from 5 day delivery

  6. The USPS is run by a bunch of idiots. If you stop delivering on Saturdays, what is the cost to the service of the delay in the mail? Even more people will utilize other means of communication. The USPS has some of the worst managers. The USPS is a service organization and an independent federal agency, it is not a private company. The USPS is not supposed to make money it is supposed to break even, but politicians want money from the USPS which it no longer has. This is the problem right now, congress and everyone wants to look long term when you really cannot with a federal agency. What if tomorrow hackers break into websites and steal millions of Americans identities? What if the internet goes down for weeks? What if a virus infects millions of computers and people have to mail but now it is only delivered 5 days? They are planning long term when they should be concentrating on all the prefunding, but alas congress is involved and if goes from 6 to 5 days and mail volume increases, it will take another act of congress months to do anything, by then mail will be so backed up people will use any alternate means.

  7. Volume to deliver is decreasing and will continue to do so. Postal shipping is the only service to beat revenue to SPLY IN Quarter 2. Business are urging customer to receive statement and pay online. Majority treasury check go direct deposit and social security mandated to issue checks via direct deposit by 2013.
    Magazines and newspapers via mail is almost nonexistent. First class the core product has decreased significantly resulting in loss revenue. Still a niche for parcel market in priority mail: TV advertising appeal to individual mailers as it is a bargain. Five day delivery can satisfy market demand for Postal products and service to street address and result in significant cost reduction for USPS. REDUCE DELIVERY DAYS FROM 3O2 TO 250 AND SAVE ON EQUIPMENT, FUEL AND PERSONNEL COST.

  8. more “carrier productivity’? This from management that could not do a carrier’s job for one month. Carrier productivity increases means more management jobs and less actual MAIL carriers.

  9. I was hired 06/11/1994 and am resigning on 06/14/2011. I finally made regular in the fall of 2010. Since that time I have lost my relief, hve to depend on te’s from surrounding areas when I need time off. I work in a level 16 office where the 2 rural carriers have relief, the ptf clerk takes off whenever she wants and my new boss takes sick leave 2 weeks in advance. The post office is a different place then when I first started. I use to like going to work, but they can have it, I’m done. Good luck to the hard working carriers who deserve more than they get, I feel your pain.

  10. OIG. Inspectors are part of management, OIG is supposedly independent of all the politics.

  11. i have a serious question and would appreciate a serious answer. today in an office near me carriers were told to leave behind certified mail that was there for delivery. pm issued the edit… is this something for the postal inspectors or oig?? locals seem to turn the other cheek. thanks.. for serious answers…

  12. CAN ANYBODY READ THIS???? The $1.4 billion discrepancy between the respective estimates results from:

    the Commission’s unwillingness to recognize about $760 million in savings from increased city carrier productivity and efficiency under a five-day schedule;

    Please explain how they plan on “saving” based on increased carrier productivity??? Any idiot knows the Flat Sorter (all you postal people know what I am talking about) aint worth a crap!!! I guess they will get that “savings” from squeezing a rock and get wine.

  13. Sam – Saturday mail is just like Mon-Fri mail. It has prescriptions, checks, cards, magazines, newspapers, parcels and ads. The USPS needs to be easier for customers to use, not harder. Let’s put this to a vote.


    A. Increase the price of stamps.

    B. Drop Saturday mail delivery.

    C. Trim all the excess upper management to achieve a worker/manager ratio similar to a private company.

    (Option C was never offered to the public when the USPS conducted its study to drop a day of delivery a few years back. That is how the USPS can say the public prefers one day less delivery over higher stamp prices. Let’s offer the public option C, too. Anybody want to guess which option would now be most popular?)

  14. 5 day mail delivery is the common sense approach to reducing USPS operation cost.. Sat . mail delivery is a nonessential service which would not adversely affect the American public. Put it to a vote and Sat. mail delivery would be defeated. Many ask the question WHY DOES POST OFICE DELIVER MAIL ON SAT. AS MOST IS JUNK MAIL. Fuel cost is expensive even with no surtax; idle 192,000 vehicles and delivery personnel and there is a significant savings to bottom line. FACE REALITY AND ELIMNATE POLITICS,

  15. As a city carrier, I’d like to know who wouldn’t call in after a 3 or 4 day holiday? I mean if you show up for work and don’t do it all in 8 hours, you’ll be taken in the office and written up! Only an idiot would show up on those days!

  16. The Postal Service can’t do anything right now, how do they think they can go “change” everything and expect wonders? Think about it, if this 5 day delivery goes into effect, then the carriers will be in the office longer on Monday morning getting their flats and etc cased, so instead of two days worth of mail, it’s now 3. Now they are leaving the office later and because of the 3 days worth of mail it is going to take longer on the street. Now, let’s throw in some Smart Markets and add even more time to their street time…. get the picture. Now, let’s throw in a Monday holiday and now you have 4 days of mail to deliver. So, with all this savings you are going to have to suck up handing out a ton of overtime because let’s face it, they are going to be over. Let’s not forget about annual leave, vacant routes and call ins. So there will be some swings handed out. I’m not seeing the savings. I’m seeing more spending! Do these upper management and PRC people have any brains? Obviously not. Or we wouldn’t be in such financial trouble. Go ahead and blame it all on funding the retirement, but it’s not all because of that. Most of it is for poor decisions and simple waste that could all have been avoided.

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