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GAO: 5 Day Delivery won’t help without comprehensive restructuring of USPS

The Government Accountability Office (GAO) released a report on the USPS proposal to end Saturday delivery. While the report said that cutting a delivery would save money for the USPS, it, like the PRC, questioned the USPS’s assumptions about the effects the move would have on its finances.

Here is the GAO’s summary of its findings:

USPS’s proposal to move to 5-day delivery by ending Saturday delivery would likely result in substantial savings; however, the extent to which it would achieve these savings depends on how effectively this proposal is implemented. USPS’s $3.1 billion net cost-savings estimate is primarily based on eliminating city- and rural-carrier work hours and costs through attrition, involuntary separations, or other strategies. USPS also estimated that 5-day delivery would result in minimal mail volume decline. However, stakeholders have raised a variety of concerns about USPS’s estimates, including,

  • First, USPS’s cost-savings estimate assumed that most of the Saturday workload transferred to weekdays would be absorbed through more efficient delivery operations. If certain city-carrier workload would not be absorbed, USPS estimated that up to $500 million in annual savings would not be realized.
  • Second, USPS may have understated the size of the potential mail volume loss due to questions about the methodology USPS used to develop its estimates of how 5-day delivery may affect mail volumes.

The extent to which USPS can achieve cost savings and mitigate volume and revenue loss depends on how well and how quickly it can realign its operations, workforce, and networks; maintain service quality; and communicate with stakeholders. USPS has spent considerable time and resources developing plans to facilitate this transition. Nevertheless, risks and uncertainties remain, such as how quickly it can realign its workforce through attrition; how effectively it can modify certain finance systems that cannot be changed until congressional approval for 5-day delivery is granted; and how mailers will respond to this change in service. Further, uncertainties remain as factors other than delivery frequency—e.g., price increases—can also affect mail volumes and revenues.

USPS’s proposal involves several factors that need to be considered. It would improve USPS’s financial condition by reducing costs, increasing efficiency, and better aligning its delivery operations with reduced mail volumes. However, it would also reduce service; put mail volumes and revenues at risk; eliminate jobs; and, by itself, be insufficient to solve USPS’s financial challenges. USPS’s role in providing universal postal services can affect all American households and businesses, so fundamental changes involve key public policy decisions for Congress. If Congress decides 5-day delivery is necessary, then Congress and USPS could factor the savings into deliberations about what package of actions should be taken to restore USPS’s financial viability. Conversely, if Congress maintains the mandate for 6-day delivery, Congress and USPS would need to find other ways to achieve equivalent financial savings, so that the package is sufficient to restore USPS’s financial viability. This would likely entail difficult decisions with broad implications for USPS’s infrastructure, workforce, and service. As GAO has reported, a package of actions by Congress and USPS is urgently needed to modernize USPS’s operations, networks, and workforce.

GAO Report on Ending Saturday Mail Delivery

  • Bob

    Mail processing would also not run on
    Saturdays. They promise that customers with post office boxes will be able to get their mail but they won’t get any new first class mail in their boxes. In order to do that they would have to run all the mail at the processing facilities to get the post office box mail out. It won’t happen. DPS mail won’t run to get box mail out because they would have to re-run that mail again for carrier routed mail for a Monday delivery.

  • Bob

    done

  • herman

    if Congress maintains the mandate for 6-day delivery, Congress and USPS would need to find other ways to achieve equivalent financial savings, OUT OF YOUR PAYCHECK.

  • Bob

    Too many “ifs” that both Congress and the USPS need to do and quickly. Neither group do things that they need to do quickly.

  • M. Jamison

    This issue highlights the problems with the strategic vision offered by the Board of Governors and Postmaster General Donahoe. One continually sees the Postal Service offer strategies and plans that are based on estimates and assumptions that are exclusively best case. It is as if senior management intentionally constrains itself to best case scenarios where every assumption is accurate and plays out according to plan. Postal management seems to have a preternatural disposition towards denying the possibility of any outcome that doesn’t reinforce its own preferences. This penchant for self-deception results in strategic plans that are unworkable and unconvincing.
    Personally I think the Postal Service has chosen the wrong vision, one of downsizing, rationalizing and essentially moving towards privatizing. It is a strategy that any company in a mature industry might utilize to sustain itself but one that does not fit our operational model.
    Rather than downsizing and ceding capability we ought to be looking at ways to maximize the asset of the postal network. The ability to reach every address six days a week has tremendous potential as does our physical presence in virtually every community in the United States. Michael Ravnitzky of the PRC has written compellingly of the possibilities of utilizing our network capabilities to perform other non-traditional but possibly essential services. The model he discusses with respect to our carrier fleet is one that also translates well to our retail network.
    However, even if one disagrees with alternative strategic visions the sad fact is that the current direction espoused by senior management is likely to fail for even if their vision is correct it is becomes clearer with each new announcement that those in charge lack the intellectual honesty to properly question and test their assumptions and plans.
    The supervisor that send a carrier out with ten hours of mail and insists she return in eight, the POOM who demands adherence to a budget that is unworkable, and the District Manager who governs by mandate all reflect the arrogance of an organization that is steeped in self-deception.

  • Simple Simon

    5 Day Delivery won’t help without comprehensive restructuring of USPS? Huh? If there was true comprehensive restructuring of the USPS, the USPS would not have to go to 5 Day Delivery…

  • ben

    M. Jamison, Very refreshing post! One of the best I’ve ever read online about Postal related attitudes and issues. Articulate and convincing.

  • PA Mailhandler

    To M.Jamison above; as a 37 year postal veteran and having worked in a BMC, P&DC, and now an A/O-Carrier Station, I say AMEN!!!!!

  • malman

    Nothing said about the extra mail that will be required to be delivered. It will take more carriers and more routes to be added then what saving is there. More benefits for the carrriers or if the powers to be have their way less benefits for more people

  • Frustrated Postal Worker

    It’s just like the Postal Service to put all their eggs in one basket years ago when they invested billions of dollars on DBCS machines to process 1st class mail that now is supposedly on the verge of extinction. This is the forward thinking “business models” that define the U.S. Postal Service and their decision makers. Wasn’t there a “business plan” several years ago implemented by Postmaster General Potter that was supposed to make us a leader in today’s communication world and take us into the future and beyond? Management tries to justify their jobs and to appease Congress for a few years in order to get them off their backs. Congress is growing weary of the same old rhetoric. They believe we are overpaid compared to the private sector. Last I heard UPS and FedEX are both paid very well. The Republicans are jumping on the “attack the state and federal workers and their unions” bandwagons in order to advance their own political agendas! M. Jamison is spot on in his commentary!

  • leroy

    Our routes were designed for 3 times the mail volume were getting. Closing sat would increase our mail volume for the other 5 days. That alone would make it more efficient. Lets be honest our routes are light on our shoulders now we wont notice 1 more pound of saturdays mail volume deliverd on the other days. Seems like it will be a plus as far as efficient delivery.