Postal Service Could Save Billions with Slower Service
August 25, 2011
The U.S. Postal Service (USPS) could save about $1.5 billion a year if it relaxed its two-to-three-day delivery schedules for first-class and Priority Mail deliveries by a day, according to a new study.
Postal executives are seriously considering the idea and are expected to announce plans regarding delivery schedules after Labor Day, according to USPS officials.
- Currently the Postal Service advises customers that first-class and Priority Mail deliveries will arrive, on average, in two or three days.
- But relaxing the schedule by a day would cut about $336 million in premium pay for employees working overnight and Sundays to meet current delivery schedules, according to the study.
- Adding one day to the schedule would put less emphasis on speed and allow the USPS to save at least an additional $1.1 billion by delivering some long-haul Priority Mail shipments by ground instead of air, consolidating mail-processing facilities and employing fewer workers, the study said.
The Postal Service's inspector general commissioned the study, which was authored by the economic analysis firm Christensen Associates.
- The study said the USPS spends about $2.5 billion annually on mail processing, transportation and other delivery-related functions.
- It estimates that first-class mail volume will drop to about 50 billion pieces annually in 2020, down substantially from the 78 billion pieces delivered last year.
- Volume for standard mail, a cheaper delivery option, is expected to remain flat at about 150 billion pieces annually.
Source: Ed O'Keefe, "Study: USPS Could Save $1.5 Billion with Slower Mail," Washington Post, August 23, 2011.
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