The U.S. Postal Service [USPS] issued a report to Congress today that asserts the Postal Regulatory Commission provided a questionable analysis on the potential cost savings a five-day a week delivery schedule would provide.
According to a spokesman from the Postal Service, today’s issuance is not a direct response to the Postal Regulatory Commission [PRC] and the report they issued to Congress in late March, but a way to stand-by the group’s own assertions that five-day a week service would yield a net annual reduction of $3.1 billion, not $1.7 billion as the PRC suggests.
The Postal Service bases its research on “extensive market research and financial estimates,” according to a news release. The PRC offers advisory opinions and analyses to the USPS whenever it makes major, nation-wide service changes. The report on these service changes issued by the PRC is non-binding.
“The Postal Service finds it unfortunate that the PRC relied upon a questionable financial analysis in developing its nonbinding advisory opinion,” a news release from USPS says. “The total impact of transitioning to a five-day delivery schedule will significantly improve the Postal Service’s financial stability by reducing annual net costs by about $3.1 billion annually.”
The groups disagree on the amount of savings cutting the service would generate, according to USPS the $1.4 billion cost differential comes from the PRC’s failure to recognize about $760 million in savings from increased city carrier productivity and efficiency the shortened schedule would provide, as well as the $260 million in savings from highway transportation and mail processing economies associated with one less day of street delivery, a news release from USPS says.
The USPS also asserts that the PRC’s “summary dismissal of the unrefuted testimony of market research experts to reach its conclusion that the Postal Service estimate of annual revenue loss resulting from the change was understated by $386 million.”
The PRC asserted in its report that the USPS did not thoroughly consider the needs of customers in rural or remote areas in service cuts. The mail delivery organization says extensive market research did consider the views of rural customers in the implementation of the new plan.
The PRC doubts efficiencies will be had and increases in productivity from a shorter delivery schedule. The report issued to Congress today contends, “No other single action the Postal Service could take operationally will result in such large cost savings,” the news release says.