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PRC Disputes Benefits of Five-Day Mail

May 2011

WASHINGTON, DC—The Postal Regulatory Commission (PRC) didn't do the United States Postal Service (USPS) any favors when it released its official advisory opinion on USPS' plan to end Saturday mail delivery, collection and outbound mail processing. Clearly, the two entities have widely diverse math calculations on the potential savings reaped by eliminating Saturday delivery, as well as the potential revenues lost through a decline in mail volume.

The Postal Service is required to ask the PRC for an advisory opinion on any change in nationwide service it proposes. USPS advised the PRC that, due to falling mail volumes and revenues, it is considering eliminating Saturday mail collection and delivery except for Express Mail and existing post office box service.

"Some of the commission's analysis in (the) advisory opinion suggests that even lower estimates of savings and higher volume losses are possible. In all cases, we chose the cautious, conservative path. Our estimates, therefore, should be seen as the most likely, middle-ground analysis of what could happen under a five-day scenario," said PRC Chairman Ruth Goldway.

Key findings of the PRC's opinion include:

• The PRC's annual net savings estimate is $1.7 billion. The Postal Service's savings estimate is $3.1 billion.

• Full savings in either case would likely not be achieved until the third year after implementation.

• The commission's estimate of net revenue losses due to volume declines caused by the service cuts is $0.6 billion. The Postal Service estimate of net revenue losses is $0.2 billion.

• The planned changes would cause an average of 25 percent of First-Class and Priority Mail to be delayed by two days.

• Customers in rural, remote and non-contiguous areas could be particularly affected by the Postal Service's plans. The commission received significant input from rural America, and traveled to South Dakota and Wyoming to meet directly with rural customers and community leaders. The Postal Service reportedly did not evaluate the impact of the proposal on that customer segment.

In other mail news, USPS is offering some of the nation's largest advertisers a "money-back guarantee" to test out direct marketing campaigns. The invitation to participate in the "Mail Works Guarantee" is being extended to 16 major advertisers. Qualifying participants invest at least $250,000 a year in advertising, but their postage spend represents less than 0.36 percent of their advertising budgets.

 

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