Post Office must find ways to cut costs

A study suggests reducing the delivery speed could save $1.5 billion a year. It's worth trying.


The U.S. Postal Service has evolved since it was established by Benjamin Franklin in 1775 by decree of the Continental Congress.

The Post Office's ability to adapt has allowed it to deliver letters and packages for a reasonable fee for more than 200 years.

But in recent years the rapid change in technology, increased expectations of consumers and competition from private delivery services have put a huge financial strain on the Postal Service. As a result, the Postal Service, which is supposed to operate without taxpayer subsidy, has been in the red for years. Last year's deficit was about $7 billion.

To this point, the Postal Service has looked at rate increases as a way to improve the bottom line. But as the cost of postage increases the usage decreases. Yet, labor and other costs continued to rise.

So how can the U.S. Post Office stay in business?

Well, a recent study has yielded an interesting idea -- relax the guarantee that first-class and priority packages and letters will be delivered in one to three days. The study estimates the Postal Service could save about $1.5 billion annually by essentially adding one day to the delivery schedule.

Reducing the urgency to process mail would cut about $336 million in premium pay for postal employees working overnight and Sundays to meet current delivery schedules, The Washington Post reported.

In addition, the report said adding one day to the schedule would put less emphasis on speed and allow the Postal Service to save at least an additional $1.1 billion by delivering some long-haul Priority Mail shipments by ground instead of air, consolidating facilities and employing fewer workers.

This approach might be worth trying.

In most cases, the speed at which a letter or package is delivered is relatively unimportant. A day or two isn't critical.

And in cases where a letter or package has to get there at a specific time there are now other options such as FedEx or UPS.

It could make good business sense for the Postal Service to cede that share of the express service market to those companies and concentrate on regular, daily deliveries of mail.

"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.

More and more people are paying their bills online and that trend is going to increase. The study 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

Meanwhile, the volume for standard mail -- a cheaper delivery option -- is expected to remain flat through 2020 at about 150 billion pieces annually.

Regular, affordable mail service is important to this nation today, just as it was in 1775. If reducing mail service by a day will help save the service it is an approach worth trying.


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