Regulators work overtime on USPS bid to drop Saturday delivery

Regulators in the US are set to provide an advisory opinion to Congress “shortly” concerning proposals by the US Postal Service to move to a five-day delivery week. The chairman of the Postal Regulatory Commission, Ruth Goldway, said today that her team had been “working overtime to resolve complex and technical policy aspects” of the USPS request to drop Saturday deliveries.

The loss-making USPS submitted its request to the Commission 12 months ago, setting out the proposal as one key part of its strategy to cut costs. The Commission’s advice on the proposal is seen as important in influencing how Congress puts forward legislation on reforms needed in the USPS.

Last March, the Commission said it would produce its opinion on the matter within six to nine months, but has remained quiet on the issue over the winter.

Speaking before the postal oversight subcommittee at the House of Representatives today, its chairman said the request to remove the USPS obligation to provide a six day per week delivery service had been the “most difficult and multi-faceted issue” she had faced in 13 years on the Commission.

Goldway said: “The Postal Service proposal to end Saturday delivery is a serious effort to improve its bottom line.

“But, cutting 17% of service in order to save what the Postal Service estimates to be $3bn must be carefully considered within our objective to keep prices down, maintain service standards and ensure efficient postal operations.”

The Postal Regulatory Commission chairman said she hoped the advisory opinion would help Congress to decide on whether the USPS six-day delivery directive should be lifted.

Five-day proposal

The USPS proposal for six-day deliveries submitted last March only referred to the dropping of Saturday street delivery – it would mean post offices still open on Saturdays, along with access to post office boxes, while express mail would continue to be delivered seven days per week.

Postal operations would also continue on a seven-day schedule according to then-Postmaster General John Potter.

Saturday deliveries would be dropped because it had the week’s lowest daily volume according to the USPS, while a third of US businesses were closed on Saturday. The Postal Service also said nationwide polls suggested that losing Saturday deliveries would be the “least disruptive day to eliminate mail delivery”.

The current Postmaster General Pat Donahoe said today that if Congress could make reforms on the USPS health benefits, pension system overpayments and on six- to five-day delivery change, “I know we can get this organisation profitable and strong going into the future.”

Speaking to the House subcommittee, he said the need for six-day deliveries was directly related to the continuing decline in first class mail volumes, despite an overall increase in mail volumes seen in the first quarter of this year.

Donahoe said of the first few months of 2011: “There was an increase in total volume. We have seen a 9.6% increase in Standard Mail, advertising mail and an increase in our package business, but we have seen a decrease of 5.9% in First Class Mail. First Class pays the freight, so that is why we are asking for the consideration before Congress to go from six to five days.”

Support

Some commercial mailers are supporting the proposal as one way for the USPS to cut costs without threatening their service levels, although some direct marketers and catalogue firms see Saturday as a good day to have items delivered, for householders to receive on a day when they are at home.

Speaking in today’s hearing, direct marketing giant Valpak called on Congress and the Commission to allow the move to five-day deliveries.

Jim Sampey, executive vice president at Valpak’s parent company Cox Target Media, Inc., said: “By recent polls, at least two-thirds of people don’t care that much about Saturday deliveries – but it would allow the Post Office to save about $3bn annually.”

Postal unions oppose the move to a five-day on the grounds that it would affect job numbers, but also argue that losing Saturday deliveries would mean a further reduction in mail volumes and a weakening of the public confidence in the US Postal Service.

Frederic Rolando, the president of the National Association of Letter Carriers said today that losing Saturday deliveries would see USPS losing business in growth areas like e-commerce and pharmaceutical deliveries.

“There’s always going to be a need for delivery on a Saturday,” he said. “This would affect the businesses that want to deliver items on a Saturday, it would affect the growing part of the postal business – people shopping online.”