USPS plan to nix Saturday mail is dealt a legislative setback

Nearly a month after the United States Postal Service announced its plans to introduce a new delivery schedule in August, which includes eliminating Saturday delivery, a piece of legislation may prevent that from becoming a reality.

The reason for that is this week’s passing of the FY2013 Department of Defense, Military Construction and Veterans Affairs, and Full-Year Continuing Resolution, which prohibits the USPS from ending Saturday delivery, according to a statement issued by Congressman Jose Serrano (D-NY).

“The Continuing Resolution is clear; there will be six day delivery for the rest of the fiscal year,” said Serrano. “Earlier this year the Postal Service announced they thought they had legal authority to end Saturday delivery. That analysis was wrong, but now there is no room for misunderstanding. This bill included advance appropriations for the Postal Service which continued the provision requiring six day delivery.  There is no longer any possibility of misinterpretation: according to their own legal analysis these steps require the Postal Service to maintain six day delivery.”

In its February announcement, the USPS said that effective August 5, 2013 its new delivery schedule will be comprised of Monday-Saturday package delivery and Monday-Friday mail delivery, which the USPS said would result in roughly $2 billion in annual savings. This plan also factored in employee reassignment and attrition, said the USPS.
Even though the USPS formally rolled out its plan well in advance, making this switch was by no means a done deal, as it requires Congressional approval. This is because it is an independent agency which receives no tax dollars for its day-to-day operations and is subject to Congressional approval, according to an Associated Press report.

Eliminating Saturday delivery has been proposed by the USPS several times in recent years.

The USPS has said repeatedly that due to falling mail volumes and revenues it has considered eliminating Saturday mail collection and delivery except for Express Mail and existing post office box service.

As removing the majority of Saturday-based operations has been discussed on and off in recent years, as the USPS has seen its fair share of financial challenges, due in large part to economic pressures and a migration to electronic media having a significant adverse impact on mail volumes and operating revenues.

While the USPS is keen on phasing out Saturday delivery, it has made significant strides on the package delivery side, which has seen a 14 percent volume increase going back to 2010. USPS officials noted that its projections of continued strong package growth over the next decade drove this revised approach to maintain package delivery six times per week.

Fiscal year 2012 shipping and package services business revenues for the USPS were up $926 million—or 8.7 percent—at $11.6 billion, and volumes were up 201 million pieces at a 6.6 percent annual growth clip.

These services include Priority Mail, Express Mail, Parcel Select and Parcel Return services and account for 2.2 percent of total USPS volume and 17.8 percent of total revenue. USPS officials pointed to e-commerce fulfillment and last-mile services as drivers for its strong performance.

If the change in schedules goes according to plan, the USPS said that mail delivery to street addresses will occur Monday through Friday, with packages still delivered six days per week. And mail addressed to PO boxes will still be delivered on Saturdays and Post Offices now open on Saturdays will remain open on Saturdays.

In explaining the rationale for this move, the USPS cited market research it conducted, as well as research by major news organizations, that show roughly seven out of ten Americans support the shift to five-day delivery as a way for the USPS to reduce costs and become solvent, adding that support is likely to be strong as the USPS plans to continue six-day package delivery.

And it added that in light of its myriad financial challenges, the Postal Service Board of Governors in January “directed postal management to accelerate the restructuring of Postal Service operations in order to strengthen Postal Service finances.

In November, the USPS said it incurred a record net loss of $15.9 billion for fiscal year 2012, compared to a $5.1 billion loss in fiscal year 2011.

In a recent interview with LM, Jerry Hempstead, president of parcel consultancy Hempstead Consulting said that USPS has stated it would still deliver parcels, and last year the USPS was granted the right to move first class parcels (under 13 ounce pieces) into the competitive definition. And In addition, he said the post offices will still be open to accept outgoing parcels and the network acceptance points for the major mailers, including Amazon, FedEx Smartpost, UPS Sure Post, Newgistics, DHL Globalmail, among others, whom will not be affected by this announcement, which is good news for shippers.

“The problem with the Postal Service is not really their mandate to deliver on Saturday, but the problem is the Congressional requirement to prepay retiree healthcare benefits for the next 75 years in a compressed 10-year schedule. No other branch of our government has such funding requirement and no private business budgets this way,” he said.

The USPS, he said, has 330,000 workers represented by the American postal workers Union, which he said essentially equates to 330,000 votes in an election.

“Eliminating Saturday delivery, one sixth of the work week, quid pro allows the USPS to obviate one sixth of the employees in the union,” he noted. “That’s 55,000 folks sent to the unemployment office in these most difficult times. I just can’t see the White House (the USPS comes under the executive branch) eliminating that many well paid jobs. What we may be observing is a shot across the bow of the Congress to create a public outcry, in order to get what the USPS really needs and that’s budgetary relief from the prefunding mandate and the workman’s comp payments it’s forced to make.”