USPS OIG: 5-Day Delivery? What About 3-Day?
From the USPS Office Of Inspector General’s Blog:
Although eliminating Saturday delivery has been heavily debated, reducing delivery to 5 days a week may not be enough. There has been some discussion of whether the viable model for the U.S. Postal Service of the future will incorporate 3-day delivery.
A 2010 study by the Boston Consulting Group for the Postal Service forecasts that the average pieces of mail per delivery point per delivery day will drop from 3.8 to 2.8 by 2020. If this projection holds true, then more household will likely receive no mail on any given day. With the increasing availability of alternative communication choices, it is unlikely that the demand for mail delivery will ever return to previous levels. Therefore, postal delivery may only be needed 3 days a week. Some homes could receive mail on Monday, Wednesday, and Friday, while others, on Tuesday, Thursday, and Saturday.
Alaska Sen. Murkowski Remarks On USPS Proposal For Five-Day Delivery
Filed under: mail delivery, postal, postal news, PRC, press releases, usps
Remarks Submitted to Postal Regulatory Commission
Senator Lisa Murkowski
Remarks As Prepared
U.S. Postal Service Proposal for Five-Day Delivery Week
September 16, 2010
Chairman Goldway, Commissioners, thank you for inviting me here to speak to you about the potential effects of the Postal Service’s proposal to eliminate Saturday delivery on Alaskans. As you were unable to schedule a field hearing to listen to Alaskans in person, I am pleased to be here to speak briefly on their behalf regarding several important issues that would be negatively affected by this proposal.
As you are aware, mail delivery in Alaska and Hawaii is very different from the other 48 states, as is our constituents’ reliance on that mail delivery for basic and necessary items. The information you received from hearings held in large, lower 48 cities will bear little relevance to the conditions and concerns of many of the people of our states. I understand that Senator Akaka is scheduled to appear in October. I will defer to him to express Hawaiians’ position on this issue. I am here today to advocate on behalf of Alaskans.
Given the distance between the Lower 48 and Alaska (especially rural Alaska), as well as the challenges of terrain, transportation, and weather, it takes longer for mail, including Express and Priority Mail, to arrive in and be delivered within Alaska. To give you some perspective, consider this. Just to get mail up to Alaska from Seattle, it must be flown farther than the distance from Washington, D.C. to Dallas, Texas. Once it arrives in Alaska, getting it out to our many far-flung communities is another major challenge.
Throughout most of Alaska, there are no roads. In most communities, don’t have mail trucks, we have mail planes. The sheer size of Alaska is hard to imagine for those who have never been there. The distance from Anchorage to Barrow in the north is greater than it is from D.C. to Quebec, Canada. It’s farther from Anchorage to Dutch Harbor out on the Aleutian chain than it is from D.C. to Memphis. And from Anchorage to Ketchikan in the Southeast, the distance is comparable to that of D.C. to Orlando, Florida. Consider further that these communities are hubs, not the very small villages that are even more difficult to reach. Fog, blizzards, rain, and gale force winds also play a large role in the ability of the Postal Service to deliver the mail in Alaska. There are some communities that can be “weathered in” for days or even weeks at a time.
Ending the processing and delivery of mail on Saturdays will lengthen the time it takes to deliver mail that much more. This delay will be further aggravated during those weeks when a holiday falls on a Monday. While it would be inconvenient to have to wait an extra day or week to receive a Netflix movie, a sweater, or so-called “junk” mail, the Postal Service plays a much more vital role in the lives of Alaskans than delivering everyday conveniences.
The U.S. Postal Service is literally a lifeline for the many Alaskans who do not have access to a pharmacy in their community where the only way to receive antibiotics, insulin, or other medications and medical devices is through the mail. Even Alaskans who do live in communities with a local pharmacy rely on prescriptions by mail because their insurance plans incentivize this practice as a cheaper alternative. In 2008-2009, one of the major mail order pharmacies, CVS Caremark, filled over 70,000 prescriptions for Alaskans. According to Caremark’s testimony to the Commission in June, “Reducing mail delivery to five days a week by eliminating Saturday delivery would keep vital medications out of patients’ hands…” Further, 90 percent of Caremark’s
prescriptions are delivered via the Postal Service, 20 percent of which are delivered on Saturdays alone. Adding to their concern is that the company also receives approximately 100,000 prescription requests on Saturdays, so this proposal would jeopardize the company’s ability to efficiently process prescriptions and send them on their way. These concerns were shared by the Pharmaceutical Care Management Association, which represents pharmacy benefit managers for several large mail order pharmacy companies.
In Alaska, the likely degradation of efficient and timely delivery of medication and medical devices is of enormous concern—one that, in my view, the Postal Service has not adequately addressed. In fact, the solutions they have proposed are unacceptable. The Postal Service has suggested that in order to be assured of getting prescriptions delivered on Saturday Alaskans should either rent a post office box or have the item shipped via Express Mail.
As you likely know, the cost of prescription drugs is high, so high as to often be a barrier for Americans who need them. For those who can barely afford the cost of their drugs as it is, adding yet another fee on top of that will be unacceptable.
Only in our very rural, remote communities where home delivery is not offered, are post office boxes available for free. For most Alaskans, however, post office box rentals cost between $28 per year and $820 per year depending on the community and the size of the box. In 27 communities, including each of our four major military bases, the minimum yearly cost is $92. Another community that falls in this fee group is Nikiski, where last year 22 percent of the population was receiving unemployment benefits at some point during the year. This past July, nearly 7 percent of the population was receiving unemployment benefits—at the height of the fishing and construction season.
In addition to the barrier of increased cost, many communities in Alaska lack a sufficient number of available post office boxes to which medications and other vital and time-sensitive mail could be delivered. For example, in Anchorage, mail is delivered to the homes of 102,461 residents. There are, however, only 8,771 post office boxes available in the entire city. If more than eight percent of Anchorage residents need or want a post office box for Saturday delivery, they would be out of luck. Nor could it be guaranteed that a box would be available close to the home of those who require one. In Homer, over two thousand residents receive their mail at home, yet there are only 369 available post office boxes. In Palmer, over 6,000 residents have home delivery, yet there are only 538 available boxes in the Palmer post office available to accommodate those who would need access to Saturday delivery. In Fairbanks, over 30,000 residents have home delivery, but there are only 3,424 boxes available.
Alaskan business owners are also concerned about degradation in efficient pickup and delivery of their commercial packages. While our postal workers work hard and do their best to provide efficient service, there are communities that have experienced serious problems with efficient mail delivery. In Skagway, for example, I’ve spoken to business owners who have entirely given up on the post office and are now putting tourists’ purchases on the railroad to Canada and shipping them to the Lower 48 from there. Many residents and tourists have also experienced difficulty receiving services during the past year when the Postal Service was unable to hire staff to work there. I am very concerned, therefore, that this proposal will lead to further breakdown of an already strained system in our small communities that rely so heavily on the U.S. mail.
In addition to the effect on the Postal Service’s customers, I am concerned about the loss of jobs for our Alaskan postal workers. While the Postal Service anticipates reducing their workforce by 40,000 people nationwide, they are not able to tell me how many Alaskans will be out of a job if this proposal is adopted. And, while the Postal Service hopes to be able to achieve their goal by not filling the positions of soon-to-retire postal workers, this is not guaranteed. In this economy, any loss of a job—indeed the loss of any position that could be filled by a willing worker, is problematic.
In closing, I would also like to note that in my view, this proposal will only lead to a further disintegration of the Postal Service’s market share, as they cede an important part of their business to UPS, FedEx, and other for-profit companies that will be only too glad to pick up the slack. This is hardly a long-term solution to the Postal Service’s problem.
Again, thank you for taking the time to listen to these concerns that are unique to Alaska and Alaskans. I hope that you will give them every consideration as you deliberate on the Postal Service’s proposal.
Closing Post Offices And Ending Saturday Mail Delivery Not On Congressional To Do List
Filed under: Congress, mail delivery, postal, postal news, usps
Lawmakers are set to tackle several big issues in the coming weeks before packing up and going home for reelection campaigns. The future of the Postal Service: Two things to watch — and neither involves ending Saturday mail delivery or closing post offices — two no-go options in an election year.
Full Story: Washington Post – Other items on the Congressional to-do list
Canada Post Innovations
PostalReporter.com reader: What would your readers think of the two innovations mentioned in this article? Canada Post adopted 5-day delivery many years ago.
Rules are rules, says Canada Post, even for double-amputee Tom Thompson, who will have to move his mailbox at least 150 feet to comply with new regulations regarding box placement.
Mailbox location in rural areas became an issue when the Canadian Union of Postal Workers negotiated contract carriers out of existence and brought the job in-house.
CUPW has complained that rural delivery is ergonomically unsafe for lone drivers. As a result, many delivery vehicles now carry two people — one to drive and one to fill mailboxes.
CUPW has also made an issue of the safety of rural delivery route.
full story: Canada Post tells double-amputee to move mailbox
GovDelivery and Zumbox To Offer Free Digital Postal Mail Delivery To Local, State and Federal Government
Filed under: mail delivery, postal, postal news, press releases
ST. PAUL, MN and Westlake Village, CA – August 24, 2010 – GovDelivery, the leading provider of government-to-citizen communication solutions, and Zumbox, the leader in digital postal mail services, today announced a partnership to aid government agencies and municipalities across the United States in dramatically reducing the financial and environmental costs associated with sending paper mail.
GovDelivery is the most comprehensive communication platform supporting government-to-citizen communication through all relevant channels including email, text messaging, and social media. Government clients use GovDelivery to send out more than 200 million messages every month on a range of topics including flu reports, natural disaster updates and changes to local park hours. With the launch of the GovDelivery and Zumbox partnership, GovDelivery clients can electronically send postal mail that is specific to an address, such as utility bills and license renewal reminders.
Zumbox connects large transactional, financial and government mailers to consumer households for the delivery and storage of digital postal mail online. For every U.S. street address, there is a corresponding Zumbox, and the service is available at no cost for citizens. Users open and verify their Zumbox account by signing up and entering their residence address at www.zumbox.com, which generates a verification code that is delivered to their residence via the U.S. Postal Service. Zumbox provides users with a simple, time-saving and environmentally responsible solution for digital postal mail with online recordkeeping of documents forever, for free.
Digital postal mail provides many benefits for government mailers large and small, particularly when compared to traditional paper mail. Benefits range from dramatic cost savings – as much as $.60 to $1.20 per resident per month – to faster collections, significant increases in paper suppression rates, and better customer service.
“Zumbox is a great channel for government information delivery and is a natural extension to our digital communication platform,” said Scott Burns, CEO and co-founder of GovDelivery. “Our government clients have been asking for additional tools to accelerate efforts to reduce paper and mailing costs, and working with Zumbox allows us to offer a unique and powerful solution that is free to implement and provides enormous benefit.”
GovDelivery and Zumbox will offer digital postal mail delivery free of charge to any of GovDelivery’s over 350 government clients provided they begin using the service in 2010. Over 15 million people are signed up to receive updates from the government through GovDelivery with over 250,000 new registrations every month. Any person with a physical mailing address can sign up for Zumbox at no charge.
“GovDelivery brings tremendous expertise in serving the government market and a blue chip list of clients that will both benefit Zumbox as it expands in this new market for us,” said John Payne, CEO “We expect to have a big impact for their customers and the citizens they serve, both financially and environmentally.”
About GovDelivery
GovDelivery is the leading provider of government-to-citizen communication solutions. GovDelivery’s digital subscription management solution provides organizations with a fully-automated, on-demand public communication system. Organizations using GovDelivery provide citizens with better service and access to relevant information by proactively delivering new information through email, mobile text alerts, RSS and social media channels. GovDelivery’s clients include the U.S. Departments of Defense, State, Labor, Transportation, Treasury, Homeland Security, Justice, Health and Human Services, state agencies across 30 states, the cities of Washington, D.C., and Minneapolis and hundreds of other organizations across the public sector. GovDelivery is a partner company of Internet Capital Group (Nasdaq: ICGE). For more information, visit http://www.govdelivery.com.
About Zumbox
Zumbox is the world’s first paperless postal system. It connects large transactional, financial and government mailers to consumer households for the delivery and storage of digital postal mail via the Internet. Digital postal mail is an exact facsimile of paper mail created from a redirection of the print stream originally intended for large mailing systems. For every U.S. street address, there is a corresponding Zumbox – a digital mailbox – enabling mail and other content to be sent as digital files and received online. Zumbox represents a more cost-effective, convenient and environmentally responsible way to deliver postal mail. As a closed system of known, verified mailers and recipients, Zumbox provides bank-level security and complies with PCI, HIPAA and BITS security standards.
USPS History On Six-Day Mail Delivery
The Postal Historian at USPS Headquarters (updated in 2009) has put together a history of six-day mail delivery. A few Seventh-Day Adventist communities like Loma Linda CA (with 14 city carrier routes) receive mail delivery on Sunday instead of Saturday.
Delivery: Monday through Saturday since 1863
City Delivery
Beginning July 1, 1863, free mail delivery was authorized in cities where income from local postage was more than sufficient to pay all expenses of the service.1 Within a year, free delivery of mail by salaried letter carriers was offered in 65 cities nationwide. By 1880, free delivery was offered in 104 cities, and by 1900, in 796 cities.
From the start, carriers were expected to make deliveries “as frequently as the public convenience . . . shall require,” Monday through Saturday.2 Postmasters determined the appropriate levels of service for their cities; there were no nationwide rules governing the number of daily trips that letter carriers made.
Business districts, with heavier mail volume and more timesensitive mail, typically received more frequent deliveries than strictly residential sections of cities. The number of daily deliveries varied by city – in 1905, letter carriers working out of New York City’s main Post Office made nine daily deliveries, whereas in Saint Paul, Minnesota, some customers received their mail once a day. (See table “Number of Daily Trips Made by Letter Carriers from Main Post Offices, 1905.”)
The 1922 Annual Report of the Postmaster General stated that “in the smaller cities three daily deliveries in business sections is the general rule, in larger cities three or four, and in the largest cities three to seven deliveries.”3
To save money, in 1923 the number of daily deliveries on many routes was reduced by one; in 1930, further reductions were made. For a few months in 1934, some residential areas received only one delivery a day.
Some residential customers also temporarily received once-a-day delivery during World War II, due to manpower shortages. In 1947, some postmasters temporarily reduced the number of deliveries in their cities to stay within their operating budget, and in 1949 one delivery trip per day was eliminated in many cities to save money.
On April 17, 1950, “in the interest of economy,” Postmaster General Jesse M. Donaldson ordered postmasters to limit the number of deliveries in residential sections to one each day.4 The only change made in business districts in 1950 was that the number of Saturday deliveries would be one fewer than the standard number of weekday deliveries.
The 1969 Annual Report noted that, because of changing transportation patterns and new distribution procedures, few second or third daily deliveries to businesses were needed. Multiple daily deliveries to many business districts ended in the 1970s, and were largely phased out by the end of the 1990s.
Rural Delivery
Free mail delivery to rural Americans began experimentally in 1896 out of three Post Offices in West Virginia;within a year 44 routes were underway in 29 states. The service proved enormously popular and was declared permanent in 1902. The number of rural carriers climbed from fewer than 500 carriers in 1899 to more than 32,000 carriers in 1905.
As a rule, rural carriers have always delivered mail to their customers once a day, six days a week. A very smallpercentage of customers in sparsely settled regions have received tri-weekly service, getting mail every other day.5
Saturday Delivery
From the start, letter carriers delivered mail six days a week, usually Monday through Saturday.6 In May and June 1947, Saturday deliveries were temporarily eliminated in some cities due to budget shortfalls.
In 1957, Postmaster General Arthur E. Summerfield decided to end Saturday deliveries nationwide because of a budget crisis. On one Saturday – April 13, 1957 – there was no mail delivery. Public outcries prompted President Dwight D. Eisenhower to sign a bill more fully funding the Post Office Department three days later, and the next Saturday service resumed.
In May 1964 the Post Office Department ended Saturday delivery of Parcel Post in 6,091 cities where carriers made deliveries on foot – again, to save money. Delivery resumed in January 1966 after President Lyndon B. Johnson promised to seek increased funding from Congress. Johnson considered “a good, stable, dependable postal system . . . vital to the well-being of the nation’s economy.”7
Sunday Delivery
As a rule, letter carriers have never gone out on their rounds on Sundays, although a few communities receive mail delivery on Sunday in lieu of Saturday by choice. For example, mail is delivered on Sunday in Loma Linda,California, a city with a large Seventh-Day Adventist population which observes the Sabbath on Saturday.
Another exception to the “never on a Sunday” rule has been made for premium-paid, expedited delivery. Mail sent via special delivery, a service available from 1885 to 1997, was delivered on Sundays in many locations.8 Express Mail, first delivered to addressees in some cities in 1973, has also been delivered on Sundays in many locations.
1 Before 1863, postage paid only for the delivery of mail from Post Office to Post Office – citizens picked up their mail at the Post Office, although in some cities they could pay an extra two-cent fee for letter delivery or use private delivery firms. In 1879 eligibility for free city delivery was extended to include any town with at least 20,000 residents within its corporate limits or any Post Office with at least $20,000 in annual revenue, and in 1887 to include any town with at least 10,000 residents within its corporate limits or any Post Office with at least $10,000 in annual revenue (Annual Report of the Postmaster General, 1893,50). In 1948, the population requirement was dropped to 2,500, with the stipulation that “the territory must also be 50 percent improved with houses” (Manual of Instructions for Postal Personnel, 1948, 238). In 1972, “750 possible deliveries” was added as an alternative to the minimum population requirement (Postal Service Manual Issue 41, October 16, 1972).
2 12 Stat. 703.
3 Annual Report of the Postmaster General, 1922, 24.
4 Ibid., 1950, 28.
5 Tri-weekly rural routes were established where mail volume was not sufficient for six-day delivery. The 1906 Annual Report of the Postmaster General (page 330) indicates that .6% of rural routes were tri-weekly. A postal survey in 1999 found that approximately .06% of rural customers received tri-weekly delivery.
6 A small percentage of customers in sparsely settled regions have received tri-weekly service, getting mail every other day.See note 5, above.
7 Letter of January 14, 1966, from President Lyndon B. Johnson to the Postmaster General (copy in the files of the USPS Historian).
8 At first the decision to deliver on Sundays was left to the local postmaster. Beginning in 1902, delivery of special delivery items was mandatory from offices that were open on Sundays; beginning in 1913, first- and second-class Post Offices also had to provide for Sunday delivery of special delivery mail (1902 Postal Laws & Regulations, 117; 1913 PL&R, 439).
HISTORIAN
UNITED STATES POSTAL SERVICE
JUNE 2009
http://www.usps.com/postalhistory/_pdf/DeliveryMondaythroughSaturday.pdf
AFL-CIO Adopts Resolution To Save Saturday Mail Service
APWU Web News Article 079-2010, Aug. 5, 2010
The AFL-CIO adopted a resolution written by the APWU in support of retaining six-day mail delivery at its Aug. 4 Executive Council meeting. The motion to adopt the resolution expresses the labor movement’s opposition to the USPS proposal to eliminate Saturday delivery.
APWU President William Burrus urged the Executive Council to endorse the resolution and to go on record as “supporting the preservation of six days of postal services per week.”
“Denying Americans six days of mail delivery will weaken their confidence in the [Postal Service’s] ability to meet their personal and business needs and lead to the ultimate demise of this important government service,” the resolution states.
The motion to Save Saturday Servicewas unanimously adopted by the council, which is comprised of leaders from the 56 labor unions governed by the AFL-CIO.
source: AFL-CIO Adopts Resolution to Save Saturday Service.
Former USPS Chief Financial Officer: Eliminating Saturday Delivery Is Not Necessary
Eliminating Saturday Delivery Would Hurt USPS In the Long-Run
Excerpts from testimony filed with the Postal Regulatory Commission by former USPS Chief Financial Officer and Senior Vice-President Michael J. Riley. Riley testified on behalf of the National Association of Letter Carriers, AFL-CIO:
From August 1993 to July 1998, I held the position of Chief Financial Officer (CFO) and Senior Vice President of the U.S. Postal Service. While I was CFO, the Postal Service overcame the biggest deficit in its history and posted billions in profits. During my tenure, the Postal Service’s Finance Department received the first Alexander Hamilton Award given by Treasury and Risk Management magazine. Also during my tenure as CFO, then Vice President Al Gore touted our successful efforts to turn around the Postal Service in publications about reinventing government.
In support of its proposal to eliminate Saturday delivery, the Postal Service’s current CFO, Joseph Corbett, asserts that a change to five-day delivery is “necessary and unavoidable.” (USPS-T-2, at p.2). He asserts that the Postal Service is now in “dire financial condition,” (id. at p.3) and that eliminating Saturday street delivery is needed to help “close the gap” between the Postal Service’s costs and revenues (id. at p.14). In fact, the Postal Service’s costs and revenues are not fundamentally misaligned and no radical change like ending Saturday delivery is necessary.
The financial challenge now facing the Postal Service stems from two principal sources. First is the requirement in the Postal Accountability and Enhancement Act of 2006 (“PAEA”), P.L. 109-435, that the Postal Service spend billions to pre-fund its retiree health care obligations — an unfair requirement that Congress can and should change. Second is the most severe economic downturn since the Great Depression, which continues to depress mail volume.
The statutory obligation to pre-fund retiree health obligations — which no other business or government agency bears — added $12.4 billion in costs to the Postal Service’s balance sheet from FY2007 to FY2009. See NALC-LR-N2010-1/6 (USPS Annual Report), at p.48. During those same three years, the Postal Service had a cumulative net operating loss of approximately $11.8 billion. See id. at 2. Thus, without the unique burden imposed by the PAEA’s pre-funding requirement, everything else equal, the Postal Service would have enjoyed a cumulative profit during those years. And such profit would undoubtedly have been even greater had the recession not dragged down economic activity and mail volume with it.
The Postal Service’s present financial situation is also a result of its having been unfairly overcharged $75 billion in retiree pension costs, as explained in the January 10, 2010 report of the Postal Service’s Inspector General (IG). See NALC-LR-N2010-1/10. Were the Postal Service credited with the amount by which it was overcharged, that would be enough to pre-fund all of the Postal Service’s retiree health obligations and have more than enough left over to pay off the Postal Service’s debt.
Moreover, I would argue, the Postal Service’s current financial situation is in part self-inflicted, to the extent that postal management failed until just recently to seek rate increases that would generate additional revenue. Successful service businesses raise prices as needed to maintain financial health.
The Postal Service acknowledges in its latest annual report that its current prices are a comparative “bargain”: in 2009, first-class mail in the US was 44 cents, but was 47 cents in Canada, 64 cents in Great Britain, 77 cents in Germany, 78 cents in France, 83 cents in Japan and $1.25 in Norway. (See NALC-LR-N2010-1/6, at p.1) That American mail is now relatively cheap means that even with a rate increase it would remain reasonably priced.
The PAEA allows for reasonable price increases beyond the inflation cap when made necessary due to “extraordinary or exceptional circumstances.” See PAEA Section 201. I believe that faced with the worst economic downturn since the Great Depression, the Postal Service could make a credible case that these are “extraordinary or exceptional circumstances.”
Indeed, I understand that on July 6, 2010, the Postal Service filed with the Commission a request for an exigent rate increase in which it argues that such “extraordinary or exceptional circumstances” now exist. See Docket # R2010-4.
A reasonable rate increase would undoubtedly help close the current gap between
the Postal Service’s revenues and costs. Commission Chairman Goldway correctly noted in her April 22, 2010 testimony before the U.S. Senate that the demand for mailing services is largely price inelastic. This means that there would most likely be a substantial increase in revenue and in added profit from a reasonable price increase. Large mailers provide the majority of postal revenue and their behavior is such that they adopt to price increases with minor changes in volume. Even for those services that are slightly demand price elastic, there is a significant positive contribution.
As a rule of thumb during my time as CFO of the Postal Service, we assumed that a 10% price increase for market-dominated products (also known as “mailing services”) would yield a net revenue gain of about 9%, since it would reduce volume by about 2% and costs by about 1%. So a 10% increase on FY 2009’s $56.9 billion in market-dominated products, see NALC-LR-N2010-1/6, at p.82, would likely have produced approximately $5.1 billion in additional revenue. It would have improved the Postal Service’s bottom line by more than the
$3.1 billion in net annual savings that the Postal Service says it would achieve by eliminating Saturday delivery. See USPS-T-2, at 16. It would also have made FY 2009 a profitable year for the Postal Service even with the PAEA pre-funding payment made that year and despite the recessionary drop off in economic activity.
I understand that in its recently filed exigent rate case, the Postal Service is seeking an aggregate rate increase of approximately 5.6%, which it estimates would yield a net increase in annual contribution of $3 billion. See Statement of Joseph Corbett, Docket No. R2010-4 (July 6, 2010), at p.19. Such an increase in annual contribution would be about what the Postal Service says it would save from eliminating Saturday delivery.
IV. ELIMINATING SATURDAY DELIVERY WOULD HURT THE POSTAL SERVICE IN THE LONG-RUN
Eliminating Saturday delivery is not only unnecessary, but would be a grave error that would hurt the Postal Service in the long-run. The proposal to eliminate Saturday delivery reflects Postal management’s view that it must react to financial challenges with relentless cost-cutting. But no service business achieves success by a single-minded focus on cost. Of course, constraining costs is important and the Postal Service should continue to explore ways to further automate or streamline its operations, so as to maintain productivity growth. But it should not engage in cost-cutting that eliminates valuable services to its customers.
The CEO of Coca-Cola once said that his company’s goal was that no one in the world should be more than five minutes away from a cold Coke. To achieve success as a consumer-oriented business, the Postal Service too should focus on making its products and services more available to its customers, not less. Dropping Saturday delivery would create a hole in the Postal Service’s current operations that would make customers have to wait a day longer, or more, to get their mail. It would also, for example, force customers who work during the week and who are not home to accept packages have to spend part of Saturday waiting in the pick-up line at the post office. It would inevitably cause customers to look to alternatives.
Eliminating Saturday delivery would also do harm to the Postal Service in less tangible, but no less significant ways. The Postal Service correctly describes letter carriers as “excellent ambassadors in promoting the agency’s image,” (USPS-T-1, at p.3), yet eliminating Saturday delivery would mean that many customers who work during the week would no longer have the chance to see and speak to their letter carrier.
Reducing the frequency of service would also send a signal to customers that their needs and preferences no longer matter to the Postal Service. It would reinforce the negative stereotype of the Postal Service as an inefficient government entity rather than a vital service oriented enterprise. Such a negative stereotype would not only dampen the public’s demand for postal services but would erode its support for the Postal Service as an institution.
Saturday delivery provides the Postal Service a competitive advantage over its package-delivery rivals. Rather than eliminating Saturday delivery, the Postal Service should be touting it. But the Postal Service has to a large extent failed to exploit this advantage. Most businesses with a competitive advantage use advertising to remind individuals of the benefits of their service. Yet the Postal Service does little advertising to explain the advantages of Saturday delivery to its customers.
V. THE POSTAL SERVICE SHOULD ADOPT A CONSUMER-ORIENTED STRATEGY
When I was CFO of the Postal Service, we adopted a business strategy that put an emphasis on the individual customer. We recognized that the preferences of the individual customer is what drives mail volume and that what was important to the individual customer were things like convenience, courtesy, safety, security of the mail and consistency of delivery.
And we tried to make it easier, not harder, for consumers to use our services. Just one example: in 1993, the Postal Service began accepting payment by credit card and customers responded enthusiastically. Our focus on the customer in those years paid rich dividends. Mail volume rose nicely despite the advent of the Internet. From FY 1995 through FY 1998, the Postal Service posted billions in profits. During that period, the Postal Service was able to pay off its debt and triple its capital spending. Indeed, many in the mailing community expressed the view that the Postal Service was earning too much money and that the profits were excessive. After my tenure, new Postal management promised to solve that problem, and solve it they did. Billion dollar profits were soon replaced by billion-dollar losses.
Rather than continue its failed approach of focusing single-mindedly on costcutting, the Postal Service should focus again on strengthening its relationship with consumers, because that undoubtedly is where long-term success lies.
We live in an era where service companies are increasing days and hours of operation to appeal to their customers. The Postal Service should take the same approach. For example, as Chairman Goldway has suggested, the Postal Service should consider having a network of post offices in key locations that are open more hours, and even on Sundays, and should maintain at least one 24/7 post office in every big city.
Yet the Postal Service has been going in the opposite direction, apparently ignoring the desires of its customers. For example, while the Postal Service increased the number of collection boxes in the 1990s, it began eliminating them in the following decade. It eliminated 24,000 such “blue boxes” in 2009 alone. Individual customers cannot help but notice these changes and see that the Postal Service is making it more difficult for them to use the postal system.
Reducing the frequency of mail delivery would mark yet another retreat by the Postal Service from the consumer market. Unfortunately, it would give customers yet another reason to abandon the mail and to seek out alternatives.
VI. CONCLUSION
Contrary to the Postal Service’s assertions, eliminating Saturday delivery is not necessary to improving its finances. In my opinion, what the Postal Service needs is a reasonable price increase for market-dominated products, relief from the PAEA’s unfair retiree health pre-funding requirement and a revival of the economy. Indeed, going to five-day delivery is not only unnecessary but would be harmful to the long-term health of the Postal Service. To be a successful service-oriented enterprise, the Postal Service must focus on making its services more, not less, available to its customers.
NALC: USPS Rejected Our Proposal That Would Of Saved Several Hundred Million Dollars Annually
TESTIMONY OF WILLIAM H. YOUNG ON BEHALF OF THE NATIONAL ASSOCIATION OF LETTER CARRIERS, AFL-CIO submitted to the Postal Regulatory Commission regarding USPS Five-Day Delivery Request:
My name is William H. Young. I submit this testimony on behalf of Intervenor National Association of Letter Carriers, AFL-CIO (“NALC”), which serves as the collective bargaining representative of a nationwide bargaining unit of city letter carriers employed by the United States Postal Service (“USPS”). I served as NALC’s President from 2002 to 2009.
In November 2006, during the last round of bargaining between NALC and USPS for a new collective bargaining agreement (“CBA”), NALC made an offer to USPS that included a package of proposed savings. In its offer, NALC proposed a separate workforce of letter carriers to delivery mail on Saturday, with all other letter carriers working only on weekdays.
Under NALC’s proposal, the Saturday letter carrier workforce would have been composed in part of letter carriers who had retired from delivering mail full-time but who wanted to continue to work for USPS one day per week. NALC believed that there was a substantial number of retirees who might be interested in such a Saturday-only position.
Under NALC’s proposal, to the extent Saturday positions remained available after retirees were hired, the Saturday workforce would have consisted of new hires hired from the USPS hiring register who agreed to take a position delivering mail one day per week until fulltime positions with USPS became available.
Under NALC’s proposal, the retirees in the Saturday workforce would have been paid at Step O pay under the CBA. However, USPS would have saved a substantial amount employing them since they were already retired; USPS would not have needed to make pension or retiree health contributions on their behalf. USPS would also have saved a substantial amount employing new hires who worked on Saturdays only. These new hires would have earned entry-level Step A pay under the CBA so long as they were part of the Saturday workforce. Moreover, under NALC’s proposal, these new employees would not have been entitled to pension, health, annual leave and other benefits.
NALC estimated that its proposal would have saved USPS several hundred million dollars annually, assuming that the new Saturday workforce were composed half of retired letter carriers and half of new hires. During negotiations, NALC shared this savings estimate with USPS and USPS did not dispute it.
Although NALC’s proposal would have substantially reduced the cost of Saturday deliveries, USPS did not accept it.
Two Congressional Panels Approve Bills to Continue Six-Day Mail Delivery
Two Congressional Panels Support Six-Day Service
APWU Web News Article 074-2010, July 30, 2010
Two congressional panels voted on July 29 to approve spending bills that would require the Postal Service to continue to provide mail delivery six days per week. The two bills — one in the Senate and one in the House — still have a long way to go before they could become law, however.
“These are important steps, but we must clear many more hurdles in order to stop the Postal Service from eliminating Saturday delivery,” said APWU Legislative & Political Director Myke Reid. “The full Senate and House would have to approve the bills, and then the two versions would have to be reconciled to resolve any differences between them.” Spending bills are traditionally very difficult to pass, he said.
The Senate Appropriations Committee voted 18-12 to approve a spending bill for Fiscal Year 2011 that would prevent the U.S. Postal Service from reducing mail delivery from six days to five. The House Financial Services and General Government Subcommittee voted by voice.
On July 28, Sen. Jon Tester (D-MT), a member of the Senate Subcommittee on Financial Services and General Government, announced that he had persuaded the members of the Senate panel to reject the USPS proposal. Sen. Tester explained the importance of six-day mail delivery to rural America.
“Folks in rural and frontier communities often rely on their Saturday mail to bring them the things they need to live. Unlike in urban areas where folks can walk down the block to the local drug store, many Montanans live long distances from the nearest pharmacy or newsstand. Getting mail six days per week is part of what keeps rural America strong and thriving.”
The bill notes the crucial role of six-day service. It says, “The Committee believes that six-day mail delivery is one of the most important services provided by the Federal Government to its citizens. Especially in rural and small-town America, this critical service is the linchpin that serves to bind the Nation together.”