The U.S. Postal Service's Board of Governors decided this week to continue with six-day delivery.
“After reviewing management's primary findings examining five-day delivery, the board decided to continue with existing six-day delivery service,'' board chairman Robert F. Rider said at the group's meeting in Evansville, IN.
According to a USPS spokeswoman, findings indicated that while cutting Saturday mail could produce some savings, it also could drive up costs on the five remaining delivery days and anger mailers. The USPS found in surveys and focus groups that many customers would take their business elsewhere or would seek electronic alternatives that would put the agency's revenue base at risk.
On April 3, the Board of Governors directed management to study cost savings associated with reducing delivery to five days and consolidating postal facilities. The USPS' facility consolidation study is expected to be completed this fall.
The threat of a cutback to five-day delivery had drawn heavy criticism from Congress, the mailing industry and the public. Many postal insiders think the USPS never had any intention of rolling back six-day delivery — which would take congressional action — but merely wanted to call attention to the need for postal reform.
“I have mixed views about the postal service's decision to not pursue examining five-day delivery,” said H. Robert Wientzen, president/CEO of the Direct Marketing Association. “I never felt they were going to eliminate Saturday delivery. Some of our member companies would be very concerned about slowing down delivery of payments, for example.”
However, Wientzen said, “We want the post office to continue to look at all options of recurring costs, and if there was a compelling argument that there was a huge savings [from eliminating six-day delivery], we would be happy to revisit that whole question.”
Christopher G. Cleghorn, executive vice president for direct and interactive marketing at Easter Seals, Chicago, said that since the postal service needed congressional approval before eliminating six-day delivery, “I didn't take the [threat of eliminating six-day delivery] all that seriously as something that actually would happen soon.”
Instead, Cleghorn said, “I think raising the issue was maybe a way of hypothetically calling attention to some of the kinds of things that might be in jeopardy at the service in the long term if there isn't effective postal reform relatively soon.”
The DMA applauded the Board of Governors for agreeing to consider consolidating postal facilities to cut costs. The association is urging the board to examine all of its operations and expenditures immediately.
“There is no doubt that the postal service is facing a crisis that will significantly impact the economy as well as the future of the direct and interactive marketing industry, as well as the postal service itself,” Wientzen said. “While elimination of Saturday delivery service has been a headline grabber, the truth is that for the postal service to remain viable, it must look at all areas of its business to find ways to continue to provide universal service in a more economical and efficient manner.”
The USPS is facing losses that could approach $1.5 billion this fiscal year. The postal service is expected to ask for another rate increase later this year.
“In looking to stem the anticipated loss for this year, the USPS has to examine its budget line by line, for all potential savings,'' said Edward Gleiman, former chairman of the Postal Rate Commission, who is spearheading the DMA's campaign to enact postal reform legislation.
“The postal service must redouble its cost-containment efforts and place all of its operating procedures and expenditures under the microscope,” he said. “It is the only way the USPS can help curb future rate increases as it waits for Congress to take action on this paramount issue.”