The US Postal Service has written to Congress, claiming that the recent Postal RegulatoryCommission (PRC) advisory opinion on the benefits of implementing a five-day delivery schedule was
based on “a questionable analysis of the potential cost savings that could be achieved”.The Postal Service has estimated that making the move from a six-day to a five-day deliveryschedule would yield a net annual cost reduction of $3.1 billion, “based on extensive marketresearch and financial estimates, provided to the PRC”. But the PRC issued a nonbinding advisoryopinion that concluded that transitioning to a five-day street delivery schedule would only achieve$1.7 billion in net annual savings.
USPS said: The $1.4 billion discrepancy between the respective estimates results from: theCommission’s unwillingness to recognize about $760 million in savings from increased city carrierproductivity and efficiency under a five-day schedule; the Commission’s failure to account for morethan $260 million in highway transportation and mail processing economies associated with one lessday of street delivery; and the Commission’s summary dismissal of the un-refuted testimony ofmarket research experts to reach its conclusion that the Postal Service estimate of annual revenueloss resulting from the change was understated by $386 million.”
The Postal Service report also questions the PRC assumption that “little, if any, efficienciesand increases in productivity would be realized in certain city carrier activities by deliveringthe same volume Monday through Friday instead of Monday through Saturday”. USPS said: “The PRCrevenue loss estimate is contradicted by the overwhelming weight of expert testimony, and fallsshort of the requirement that it be based on substantial record evidence.”
USPS said it was “unfortunate that the PRC relied upon a questionable financial analysis indeveloping its nonbinding advisory opinion. The total impact of transitioning to a five-daydelivery schedule will significantly improve the Postal Service’s financial stability by reducingannual net costs by about $3.1 billion annually. No other single action the Postal Service couldtake operationally will result in such large costs savings.”
The Postal Service report also vigorously disputes the PRC claim that the five-day deliveryproposal 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 ruralcustomers and incorporated them into its implementation plan”. The Postal Service noted that thesame market research methodology for considering the needs of rural customers was accepted by thePRC in its 2009 Universal Service report.
The Postal Service report to Congress regarding the March 2011 advisory opinion also criticisesthe PRC “for its inability to fulfil its core function in the nonbinding advisory process, which isto address whether the proposed service changes would be consistent with governing statutorypolicies”.
