The Postal Regulatory Commission has issued its long awaited advisory opinion on the US Postal Service’s proposal to do away with Saturday delivery. The opinion doesn’t make a yes or no recommendation, but in 211 pages of testimony and analysis, suggests that some of the postal service’s estimates of cost savings are over-estimated, while service impacts are sometimes under-stated.
Key findings of the Commissionâ€™s Opinion include:
- The Commissionâ€™s annual net savings estimate is $1.7 billion.
- The Postal Serviceâ€™s savings estimate is $3.1 billion.
- Full savings in either case would likely not be achieved until year three after implementation.
- The Commissionâ€™s estimate of net revenue losses due to volume declines caused by the service cuts is $0.6 billion.
- The Postal Service estimate of net revenue losses is $0.2 billion.
- The planned changes would cause an average of 25 percent of First-Class and Priority mail to be delayed by two days.
- The Postal Service did not evaluate the impact of the proposal on customers who reside or conduct business in rural, remote, and non-contiguous areas.
- Customers in rural, remote, and non-contiguous areas can be particularly affected by the Postal Serviceâ€™s plans. The Commission received significant input from rural America and traveled to South Dakota and Wyoming to meet directly with rural customers and community leaders.
Several commissioners submitted separate opinions, with Chairman Goldway finding that:
“The Commissionâ€™s advisory opinion describes how the Postal Serviceâ€™s plan will produce a significant and disparate reduction in levels of service throughout the nation, and that the impact of that reduction in service will be particularly felt in remote and rural areas.
With this proposal, the Postal Service is challenging established national postal policy in two main ways. First, it is asking to significantly reduce service from 1983 levels yet maintain the rates set for six-day service. In its testimony, the Postal Service acknowledges that a reduction in service could be characterized as a hidden cost. It would amount to a de facto price increase. The American public will pay the same amount tomorrow yet receive a level of service quality that falls well below todayâ€™s service levels.
While Dan Blair wrote that
In my view, the proposal represents a dramatic step toward realignment of the Postal Serviceâ€™s universal footprint so that postal operations and expenses are in line with revenues.
But at the same time:
In proposing to reduce days of delivery, the Postal Service must balance service against solvency. A reduction in days of delivery will produce a significant cost savings, but the Postal Service must show Congress that these reductions help, not hurt, its future financial viability to sustain the needs of the Nation.