Study: USPS could save $1.5 billion with slower mail

August 23, 2011

Think snail mail is too slow? Imagine if it got slower.

The U.S. Postal Service 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.

The study’s authors acknowledge that even with households and companies relying more on online payment systems and
e-mail, the Postal Service maintains a reputation for reliable service, no matter the speed.

“Some of the Postal Service’s largest business mailers have stated that they value consistency over speed and they would tolerate slightly slower service to save costs,” the report said.

Ed O’Keefe is a congressional reporter with The Washington Post and covered the 2008 and 2012 presidential and congressional elections.
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