The U.S. Postal Service isn't going to get its no-Saturday-delivery put into effect without a struggle. "This proposal has a lot of doubters," says Ruth Goldway, chairman of the Postal Regulatory Commission (PRC), which must issue an advisory opinion on the USPS's plan. "I'm skeptical," she says.
he five-member PRC plays only an advisory role in the USPS's plans, but "Congress is probably going to look at our record and our recommendation before they act," Goldway says. "Our advisory opinion has a good deal of weight in this case."
The USPS is filing a request for the commission's advisory opinion on the service's five-day delivery proposal, which drops Saturday mail, to save $3.1 billion annually.
However, Goldway says, "I don't believe they're going to save as much money as they think they are. It will lower total volumes in the mail more than they think [and] make the mail less viable." Saturday service is one of the "strategic advantages" the Postal Service has now, she says.
In addition, "It's not a good idea at this time of high unemployment to eliminate tens of thousands of jobs without carefully looking at alternatives. I'm going to look at this proposal and all the evidence very carefully before I make my decision."
Opposition in Congress
As approved by the USPS board of governors on March 24, the plan calls for five-day delivery to start in fiscal 2011. According to a new USPS website created to provide information about the proposal, the abbreviated schedule is needed because the USPS "is facing unprecedented volume declines" and a $238 billion projected shortfall during the next decade. The service is a self-supporting government entity that receives no direct support from taxpayers.
Some members of Congress aren't likely to be keen on the plan. Rep. Sam Graves (R-Mo.) last year proposed legislation with 49 co-sponsors that urged the Postal Service to keep its six-day delivery schedule, but the House Committee on Oversight and Government Reform has yet to act on the bill. Earlier this month, Sen. Susan Collins (R-Maine), the ranking member of the Senate Homeland Security and Government Affairs Committee, also said she's skeptical about the proposal to cut Saturday mail.
Further, Goldway held out the possibility that the PRC could go further than provide merely an advisory opinion, which it expects to do in six to nine months after field hearings are held across the country. When the PRC makes its annual compliance determination, it has the power -- so far unused and untested -- to require the USPS to reinstate activities it reduced in the previous year, she says.
Goldway, however, was more supportive of proposals to give the USPS relief from a requirement (imposed under the Postal Accountability and Enhancement Act of 2006) that retiree health care benefits be prepaid. That mandate costs the USPS $5.5 billion a year. "No other government agency, and almost no other private company, has to set up a fund to prepay its health care retiree benefits," she says. "The mailing community, including the commission, feels strongly that the Postal Service needs relief" from the requirement.
40,000 Fewer Jobs?
The delivery cuts are part of a comprehensive plan by Postmaster General John Potter to reduce costs, increase productivity and make other changes for a "leaner, more flexible Postal Service." The USPS has annual revenue of more than $68 billion and delivers nearly half the world's mail. If it were a private sector company, it would rank 28th in the 2009 Fortune 500.
At a briefing in New York on Monday, Deputy Postmaster Patrick Donahoe said the service cut would result in the loss of about 40,000 full-time jobs. About 600,000 workers currently work for the USPS.
Like the media, the USPS has felt the profound changes in the ways Americans communicate as electronic modes have replaced letters and other types of "snail mail." Revenue from first-class mail, the service's primary product, continues to decline. In fiscal 2009, mail volume plummeted by 25.6 billion pieces, nearly 13% of total volume, resulting in a revenue drop of nearly $7 billion, the USPS reports.
That trend is likely to continue. In addition, current economic conditions have forced the largest users, who in the past spent millions of dollars on mailings, to drastically cut back.
Part of a Larger Plan
Pledging to provide "five days of delivery, six days of service," the USPS says weekday-only delivery is one of its best options to significantly slash costs. Saturdays have the lowest daily volumes, and more than a third of U.S. businesses are closed. Polls cited by the service found support for five-day delivery to help the system maintain financial stability.
Goldway, of course, isn't the only skeptical participant. The Postal Service also faces opposition to the Saturday cuts from the four unions that represent its employees.
Curtailed delivery is a critical part of a larger plan announced March 2 for the next decade. Called "Delivering the Future," it's aimed at making the USPS viable for the long term. The plan anticipates getting approval for legislative and regulatory changes to give the service more flexibility to make business decisions quickly, including pricing decisions.
Two of the plan's key proposals require action by Congress: restructuring the retiree health benefit prepayment schedule and eliminating statutory language mandating mail delivery six days a week.
Goldway notes that Congress included language in 1983 specifically requiring that the USPS keep its current delivery schedule after it had pushed hard in 1977 and 1980 to cut back to five days. "The Congress knew what it was doing when it put that language in in 1983," she says. "It was specifically responding to concerns that the Postal Service might cut service."
Ties That Connect a Nation
Other elements of the proposal will be detailed in the filing with the PRC. Street delivery and blue-box collections would be eliminated on Saturdays. Express Mail Service would continue seven days a week. And post offices that currently are open on Saturdays will remain open. Post office box accessibility would continue, and bulk mail and drop shipments would continue to be accepted at facilities that are currently open.
The USPS is the only delivery service the reaches all 150 million residences, businesses and PO boxes in the country. It operates 36,000 retail locations, and it relies on sales of postage and other products to pay operating expenses. Whether its mail carriers keep stopping by at your home or business on Saturdays next year remains to be seen.