PRC Issues Advisory Opinion on Postal Service Five-day Delivery Proposal

March 24, 2011 — The Postal Regulatory Commission today issued its Advisory Opinion in Docket N2010-1 on a Postal Service plan to end Saturday mail delivery, collection, and outbound mail processing. The Postal Service advised the Commission 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.

It should be noted that the Commission did not make a specific recommendation, and four out of the five commissioners had additional and separate views.

“The Commission’s opinion is advisory only and therefore, is not a final determination on the merits of our proposal,” said Postmaster General Patrick R. Donahoe in a separate release. “We remain convinced of our findings. As such, we will also continue to press our case with the Congress on this matter.”

To read the full advisory opinion, please click here.

Key findings of the Commission’s Opinion include:

The Commission’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 year three 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.

The Postal Service did not evaluate the impact of the proposal on customers who reside or conduct business in rural, remote, and non-contiguous areas.

Customers in rural, remote, and non-contiguous areas can 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 following chart provides a comparison of Commission and Postal Service analyses of cost savings and revenue losses that would result from implementing the proposed service reductions. The Net Savings totals would likely not be achieved until three years after implementation.

Financial Impact of Postal Service Plan (millions)

Postal Service Savings Estimate

Commission Finding

Difference

City Carriers

$2,263

$1,503

$760

Rural Carriers

$484

$484

$0

Transportation

$377

$169

$208

Mail Processing

$123

$67

$56

Post Office Operations

$53

$53

$0

Total Savings

$3,300

$2,276

$1,024

Lost Revenue

($201)

($587)

$386

Net Savings

$3,099

$1,689

$1,410

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